Outlook: Energies are looking for their second consecutive week of gains with crude and products all edging higher today. The market has shrugged off what looked to be a bearish EIA report from the supply perspective. Demand continues to draw priority on both a domestic and global scale with a 15% increase w/w in petroleum demand in the US and expectations for elevated travel with China’s Lunar New Year Holiday. Recent economic reports have also leaned bullish which has pushed recent polls to predict 25 basis point increases as opposed to 50 for the next several rate hikes. A revision lower of the final target could also provide support if indications are for a softer landing. A contracting economy is fragile and the narrative can quickly shift to a recessionary threat if the pace accelerates.
Crude
- Chinese national oil company Unipec ramped up purchases, indicating increasing demand.
- China’s imports of Russian energy fell to their lowest level since March, according to Bloomberg.
- A Reuters poll estimates the Fed will increase interest rapes b 25 basis points at each of its next two meetings.
- The next Fed meeting is scheduled for Jan 31st – Feb 1st.
- US crude net imports fell by 1.2 million barrels last week
- The EIA reported crude stocks rose by 8.4 million barrels last week.
- Baker Hughes will report its rig count at 12:00 CT
- Today is the last trade day for February WTI.
- As of 8.18 am CST: Brent crude oil up $0.39 to $86.55, US dollar index up $0.405 to 102.463 while the nearby e-mini S&P 500 futures contract is up 11.25 to 3926.00.
Diesel
- The EIA reported distillate stocks fell by 1.9 million barrels last week.
- Diesel demand was up 5.3% w/w.
- The average four-week seasonal diesel demand is 9.7% below year-ago levels.
Gasoline
- The EIA reported gasoline stocks rose by 3.4 million barrels last week.
- Gasoline demand was up 6.6% w/w.
- The average four-week seasonal gasoline demand is 4.6% below year-ago levels.
Propane
- Conway is trading at .8850 while Belvieu is trading at .8975.
- Conway is trading at 47% of crude.
- The US is exporting 55% of production as of 1/13/23.
- The EIA reported a 1.9 million barrel draw in propane stocks last week.
Natural Gas
- US natural gas demand rose to 114.4 Bcf/d yesterday.
- US dry production fell to 97.6 Bcf/d yesterday.
- Overnight weather runs were unchanged through the two-week forecast.
- The EIA reported an 82 Bcf draw for last week.
- Total storage sits 1.2% above the 5-year average.
Daily Continuous HO: The prompt diesel contract will look to close above $3.40 today for an indication of another higher move next week. This level has been rejected a few times over the last several months. Diesel has added over 65 cents since its low in early December.
