Outlook: Energies are mixed to start today’s session but have posted a healthy week of gains. Crude is up over $5 on the week so far, while diesel and gas are up over 20 cents. The narrative for this week was heavily focused on China as mobility data and crude purchasing have provided an optimistic demand outlook. China has continued to move forward with relaxing covid restrictions despite an ongoing covid outbreak. The Lunar New Year will officially start next weekend and demand is expected to remain strong throughout its duration. US economic data has also been a driver this week with CPI data showing a decline in inflation. The prospect for a Fed pivot towards smaller interest rate hikes has pushed the US dollar index to 7-month lows.
Crude
- Chevron, Exxon Mobil, and TotalEnergies are investigating operations in India’s oil and gas exploration and production, which could shift upstream capacity away from the Middle East.
- ANZ analysts said a congestion index covering 15 major Chinese cities rose 31% w/w.
- Chinese Lunar New Year officially starts January 22nd and runs through February 5th.
- Reuters has China’s 2022 oil imports down 0.9% while December increased 4% y/y.
- A Bloomberg survey projects that Chinese oil demand will increase by 800,000 bpd to a record 16 mbpd in 2023.
- The US House of Representatives voted Thursday to ban selling oil from the SPR to China.
- The White House said yesterday that they won’t rule out further releases from the SPR.
- Baker Hughes will report its rig count at 12:00 CT.
- The US dollar index hit 7-month lows this morning.
- As of 8.06 am CST: Brent crude oil up $0.28 to $84.31, US dollar index up $0.320 to 102.566 while the nearby e-mini S&P 500 futures contract is down 40.25 to 3962.00.
Diesel
- AAA reports the national average retail diesel price at $4.615, down from $4.677 a week ago.
- Diesel is still facing a mild temperature trend which is suppressing heating demand.
Gasoline
- AAA reports the national average retail gas price at $3.285, down a half-cent from last week’s average.
- The prompt RBOB contract is finding resistance at its 100-day moving average near $2.4876.
Propane
- Conway is trading at .8100 while Belvieu is trading at .8200.
- Conway is trading at 43% of crude.
- The US is exporting 69% of production as of 1/6/22.
Natural Gas
- Total US gas demand rose to 110.1 Bcf/d.
- Total US dry production fell to 97.6 Bcf/d.
- Overnight weather runs removed 2 HDDs through the two-week forecast.
- The EIA reported an 11 Bcf injection yesterday.
Daily Continuous WTI: The prompt crude contract is testing its 50-day moving average today, represented by the blue line. Crude will look to post its fifth consecutive day of gains if it can hold on throughout the session. The 100-day moving average in purple could quickly become the next resistance target if a close above the 50-day is accomplished.
