Outlook: Energies are inching higher today with WTI fighting for a weekly gain while products are on track of a weekly decline. It has been a relatively quiet week with respect to fresh headlines. WTI has settled into a bit of a trade channel as it waits for compelling market influence. Products supplies have remained tight with refinery turnarounds keeping utilization rates below seasonal averages. Fresh economic data showing the economy grew more than expected for Q4 has helped calm recession fears. The Fed will announce the next round of interest rate hikes on Wednesday next week. Industry expectations are for an increase of 25 bps. There is one more rate high scheduled after next week which will bring interest rates to their terminal level near 5%.
Crude
- Russia’s offline primary oil refining capacity for 2023 is set to increase by 29% in 2023, according to Reuters calculations.
- China’s Ministry of Transport expects this year’s Spring Festival travel traffic to increase by 99.5% y/y or 70.3% of 2019 levels.
- WTI is testing its 100-day moving average again today near $82.02, after failing to conquer the mark yesterday.
- US GDP grew faster than expected at 2.9% in Q4.
- The Fed will meet next Tuesday and Wednesday to announce the next round of interest rate hikes.
- Michigan Consumer Sentiment for January will be reported at 9:00 CT.
- Baker Hughes will report its rig count at 12:00 CT.
- As of 8.27 am CST: Brent crude oil up $1.32 to $88.79, US dollar index up $0.230 to 102.069 while the nearby e-mini S&P 500 futures contract is down 12.25 to 4063.00.
Diesel
- The EU is considering a price cap of $100/barrel for Russian diesel and products that trade at a premium to crude.
- The national average retail diesel price is at $4.689.
Gasoline
- The national average retail gas price is at $3.509.
- The prompt gasoline crack has added ~$4 through January, despite the sharp pullback off its highs this week.
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.
- Cold temps could support heating demand over the next week, however warmer weather revisions continue to populate on the back end of the forecast.
Natural Gas
- US natural gas demand rose to 127.2 Bcf/d yesterday.
- US dry production fell to 97.2 Bcf/d yesterday.
- Overnight weather runs removed 3 HDDs through the two-week forecast.
- The EIA reported a 91 Bcf withdrawal from storage for last week.
- Yesterday, FERC approved Freeport LNG’s request to resume operation of loop 1 LNG transfer piping.
Daily Continuous WTI: WTI is eyeing down a few targets to close the week. The 100-day moving average has represented strong resistance this week, with the market testing it for the 4th time this week. The weekly high of $82.64 could establish secondary resistance if crude gathers momentum through the 100-day resistance.
