Outlook: The energy complex is off to another quiet start this morning with crude and products observing marginal gains. Russia has spoken out again against limiting any discounts to their Urals crude, which had reportedly been sold at under half of the Brent benchmark. While crude is still flowing out of Russia, demand appears to be trending higher with Saudi Aramco supplying full contractual volumes to Asia in February. US crude fundamentals are still tight relative to the 5-year average at -21.2 million barrels, however, the prompt WTI spread reflected its largest carry since November yesterday. Macro influences could provide price direction this week with a Fed speech scheduled for this morning and inflation data on Thursday. The EIA will return to its normal reporting schedule this week with inventory data being released on Wednesday.
Crude
- Russia is planning to monitor international prices of its crude and limit any possible price discounts that emerge.
- Russian Urals out of the Baltic Sea was reportedly priced at $37.80 on Friday, according to Argus Media. That is less than half of where Brent futures settled that day.
- According to Bloomberg, Saudi Aramco will give full contractual crude supply for February sales to at least three customers in Asia.
- Alberta’s oil output rose 117,000 bpd to a record 3.96 mbpd in November, according to AER data.
- TotalEnergies Port Arthur 238,000 bpd refinery is expected to attempt to restart on Thursday.
- WTI’s prompt spread closed at its weakest level since November on Monday at -29 cents.
- Reuters estimates crude stocks fell by 2.4 million barrels last week.
- US Federal Reserve Chair Jerome Powell will speak today at 8:00 am CT.
- Two US Fed officials said on Monday that they expect the Fed policy rate at 4.25% – 4.5% would need to rise in steps to 5.0% – 5.25% to bring inflation under control.
- As of 7.42 am CST: Brent crude oil up $0.23 to $79.88, US dollar index up $0.417 to 103.418 while the nearby e-mini S&P 500 futures contract is down 20.25 to 3893.00.
Diesel
- Reuters estimates diesel stocks fell 100,000 barrels last week.
- Retail diesel prices fell 0.7% w/w to $4.549 according to Bloomberg Automation.
Gasoline
- Reuters estimates gasoline stocks rose by 1.5 million barrels last week.
- Retail gasoline prices rose 1.4% w/w to $3.167 while Midwest prices rose 3.1% to $3.118, according to Bloomberg Automation.
Propane
- Conway is trading at .7500 while Belvieu is trading at .7400.
- Conway is trading at 42% of crude.
- The US is exporting 74% of production as of 12/30/22.
Natural Gas
- Total US gas demand fell to 112.1 Bcf/d.
- Total US dry production fell to 97.3 Bcf/d.
- Widespread warm weather in the US and Europe has suppressed natural gas prices.
Weather Outlook: Weather forecasts continue to develop an above-normal model. Propane, natural gas, and diesel are all experiencing some level of downside pressure with heating demand below seasonal norms.
