Outlook: The energy markets are mixed this morning with crude looking for direction while products push lower. An industry survey yesterday afternoon held a bearish tone in comparison to Reuters estimates. The survey revealed builds across the board with crude stocks increasing by 6.3 million barrels, according to sources citing the API. Cushing inventories have also been on the rise and are at their highest levels in over a year. The builds have helped maintain the contango in the front end of the WTI forward curve. With a busy slate the rest of the way this week, expect an uptick in volatility with a possible shift in the trend with the right narrative. The Fed will meet today to announce its next rate hike with the commentary to follow equally as important. Whether the tone comes across as dovish/hawkish could establish market direction for the rest of the week.
Crude
- OPEC+ JMMC made no recommendation for adjustment to the current output policy.
- The Biden Administration plans to support ConocoPhillips’s oil project in Alaska which could yield 629 million barrels of oil at a 180,000 bpd pace.
- The Fed will announce its rate hike decision today at 1:00 CT.
- Euro-area inflation slowed by more than expected in January which could influence the ECB’s rate decision tomorrow. Expectations are for a 50 basis point increase.
- Reuters estimates crude inventories rose by 0.4 million barrels last week.
- An industry group survey yesterday afternoon showed crude stocks rose by 6.33 million barrels last week, according to sources citing the API.
- The EIA will report inventories today at 9:30 CT.
- As of 8.15 am CST: Brent crude oil down $0.36 to $85.10, US dollar index down $0.372 to 101.725 while the nearby e-mini S&P 500 futures contract is down 13.25 to 4077.00.
Diesel
- An industry group survey yesterday afternoon showed distillate stocks rose by 1.5 million barrels last week, according to sources citing the API.
- Reuters estimates diesel inventories fell by 1.3 million barrels last week.
- Russian Diesel has fallen to around a 25% discount to non-Russian supply ahead of the EU ban on seaborn Russian products on Feb 5th, according to Bloomberg.
Gasoline
- An industry group survey yesterday showed gasoline stocks rose by 2.7 million barrels last week, according to sources citing the API.
- Reuters estimates gasoline inventories rose by 1.4 million barrels last week.
Propane
- Conway is trading at .8800 while Belvieu is trading at .8900.
- Conway is trading at 48% of crude.
- The US is exporting 68% of production as of 1/13/22.
- OPIS estimates propane inventories fell by 1.5 million barrels last week.
Natural Gas
- US natural gas demand grew to 141.9 Bcf/d yesterday.
- US dry production fell to 95.6 Bcf/d yesterday.
- Overnight weather runs removed 14 HDDs through the two-week forecast.
- Over 30 heating degree days have been removed for the first full week February (5th-11th)
Continuous Daily RBOB: With the February contract expiring, the March contract has stepped into the prompt spot. RBOB saw a similar bottom back in December of 2021 before starting on a steady climb up to the spike induced by the Russian invasion. A target near $2.80 could be relevant if the market tightens as anticipated heading into spring/summer.
