Outlook: The energy complex is starting the week higher with crude and products all observing gains. The market has continued to rebound out of the hole it dug in early December driving various contracts to show technical trend change indicators. The story has been the same for the last several weeks with that being China and their expected demand recovery. The Lunar New Year is underway and demand indications could be few and far between until it ends in early February. With a lofty premium being put in the market, the threat of buying the rumor and selling the fact is a real possibility if data shows lower-than-expected demand when the holiday concludes. Domestic inventories and outside markets could have a growing short-term influence with China on holiday. Refinery turnarounds could put pressure on product deficits while lowering crude demand. The Fed will meet to announce the next interest rate hike on February 1st.
Crude
- The G7 has agreed to delay a review of the Russian oil price cap level until March, a month later than previously scheduled.
- The G7 will announce its price cap for Russian refined products on Feb 5th.
- Crude in floating storage declined by 1.09 million barrels last week, according to global tanker readings.
- Exxon Mobil said planned maintenance at its 560,000 bpd Baytown refinery is expected to last several weeks.
- The Commitment of Traders report showed managed money traders increased their net length by 25,867 contracts to 182,052 contracts.
- Baker Hughes reported oil rigs fell by 10 to 613 last week.
- The daily continuous WTI contract is testing its 100-day moving average today around $82.34
- As of 8.41 am CST: Brent crude oil up $0.72 to $88.35, US dollar index up $0.235 to 102.244 while the nearby e-mini S&P 500 futures contract is up 4.25 to 3992.00.
Diesel
- The Commitment of Traders report showed HO managed money traders are net long 17,627 contracts after net buying 669 contracts.
- Prompt diesel is trading above its 100-day moving average for the first time since November.
Gasoline
- The Commitment of Traders report showed RBOB managed money traders are net long 56,538 contracts after net buying 856 contracts.
- The energy branch of France’s CGT union has called for a 48-hour strike starting this Wednesday and a 72-hour strike starting Feb 6th. The strikes have affected the delivery of fuels from three refineries.
Propane
- Conway is trading at .9100 while Belvieu is trading at .9200.
- Conway is trading at 46% of crude.
- The US is exporting 69% of production as of 1/6/22.
Natural Gas
- US natural gas demand rose to 123.0 Bcf/d yesterday.
- US dry production fell to 97.8 Bcf/d yesterday.
- Overnight weather runs added 8 HDDs through the two-week forecast.
Daily Continuous HO: The prompt diesel contract is trading above its 100-day moving average for the first time since mid-November. A close above this level could put diesel on the hunt for its 200-day moving average by the end of the week, assuming momentum continues. While unlikely in the short term, it’s also worth noting the unfilled gap target near $4.00. This target could become a quick reality if the market remains tight domestically and the G7 sets a restricting cap for refined Russian products on Feb 5th.
