Outlook: Crude and products are all finding strength today while natural gas has slumped below the 3-dollar threshold. Indications that covid infections in China have sharply declined from its highs is providing support, with growing optimism that the lifting of covid restrictions will continue. Russian oil is continuing to find a home with India saying they are willing to increase purchases if the price is right. Russia will face refined product targeted sanctions on February 5th which could throw another wrinkle in supply dynamics. WTI is again facing off with its 100-day moving average for resistance after rejecting it several times over the last week. A close above $82.07 today could provide a technical boost to end the week.
Crude
- According to the Chinese Center for Disease Control, the number of covid related deaths and severe cases has decreased by over 70% from peak levels in January.
- Indian refinery executives said they are open to purchasing more Russian crude if the prices are right.
- The US Department of Energy is expected to announce more than $100 million in funding to expand US biofuels production.
- US imports of foreign crude increased by 800,000 bpd last week to the highest level in three months.
- The EIA reported a 500,000 barrel build in crude stocks for last week.
- Crude stocks have risen to their highest level since June 2021.
- Crude stocks are 10.7 million barrels above the 5-year average.
- As of 8.00 am CST: Brent crude oil up $1.50 to $87.62, US dollar index up $0.081 to 101.722 while the nearby e-mini S&P 500 futures contract is up 23.25 to 4055.00.
Diesel
- The EIA reported a 500,000 barrel draw in diesel stocks for last week.
- Diesel stocks are 27.1 million barrels below the 5-year average.
- Average 4-week diesel demand is down 13.5% from year-ago levels.
Gasoline
- The EIA reported a 1.8 million barrel build in gasoline stocks for last week.
- Gasoline stocks are 19.2 million barrels below the 5-year average.
- Average 4-week gasoline demand is 4.6% below year-ago levels.
Propane
- Conway is trading at .9150 while Belvieu is trading at .9250.
- Conway is trading at 48% of crude.
- The US is exporting 68% of production as of 1/13/22.
- The EIA reported propane stocks fell by 1 million barrels last week.
Natural Gas
- US natural gas demand fell to 123.6 Bcf/d yesterday.
- US dry production rose to 97.3 Bcf/d yesterday.
- Overnight weather runs removed 13 HDDs through the two-week forecast.
- The EIA is expected to report an 84 Bcf draw from storage.
- Gas flows to Freeport LNG have resumed flows according to Refinitiv data.
Weekly Continuous NG: Natural gas has extended its weakness and dipped below $3 for the first time since Q2 2021. The warmer weather pattern throughout the US and the disruption to Freeport has allowed inventories to recover and swiftly brought the market off its highs. $2.50 quickly becomes the next psychological target for support.
