Outlook: Energies are finding strength through the extended session from yesterday. Crude and products are trading marginally higher across the board today and will look to keep the daily streak of gains going. OPEC released its monthly report this morning showing a small increase in production while leaving their 2023 demand forecast unchanged. OPEC said they remain optimistic regarding China and demand recovery. China released additional 2022 data which reflected the negative effects of demand destruction from various covid lockdowns. Despite smaller than expected GDP and a decline in crude processing, the market appears to be forward-looking with anticipation of demand recovery supporting prices. Inventory data is delayed by a day this week due to the shortened holiday session yesterday. The API will report its survey tomorrow afternoon and the EIA will report Thursday morning.
Crude
- OPEC says its oil output rose by 91,000 bpd in Dec. to 28.97 mbpd.
- OPEC expects China’s oil demand to increase by 510,000 bpd in 2023.
- OPEC’s top official said he’s cautiously optimistic about the outlook for the global economy.
- Russia’s seaborne crude exports rose to the highest level since April last week.
- China’s crude processing fell 3.4% last year for its first yearly decline since 2001.
- China’s GDP expanded 3% in 2022, missing the official target of 5.5% and marking the second-worst performance since 1976.
- Open interest across the main oil futures contracts rose to its highest level since June last week.
- Money managers cut their WTI net long position to its lowest level in 5 months last week.
- The February WTI contract will expire this Friday.
- As of 8.24 am CST: Brent crude oil up $1.79 to $86.25, US dollar index down $0.173 to 102.031 while the nearby e-mini S&P 500 futures contract is down 1.25 to 4016.00.
Diesel
- OilChem sees Chinese diesel demand increasing by 4% this year.
- Prompt diesel is testing its 50-day moving average around $3.2826
Gasoline
- OilChem sees Chinese gasoline demand increasing by 9% this year.
Propane
- Conway is trading at .8150 while Belvieu is trading at .8250.
- Conway is trading at 43% of crude.
- The US is exporting 69% of production as of 1/6/22.
Natural Gas
- US natural gas demand fell to 111.1 Bcf/d yesterday.
- US dry production fell to 97.8 Bcf/d yesterday.
- Overnight weather runs added 25 HDDs through the two-week forecast.
- Baker Hughes reported US natural gas rigs fell by 2 last week.
- Freeport LNG began taking in natural gas over the weekend.
China’s Crude Processing: China’s crude processing fell by 3.2% to 13 million bpd in 2022, according to Bloomberg data. Covid lockdowns across many major cities caused significant demand destruction, halting the long stretch of growth. FGE estimates processing with an increase of 150,000 bpd in the first half of 2023 as covid restrictions ease.
