Outlook: Energies have been on both sides this morning with a lack of compelling headlines to provide clarity to the market. The anticipated EU embargo and price cap for Russian refined products is set to go into effect this weekend. While the Oil embargo has had little effect on Russian oil flows thus far, the refined product targeted sanctions are expected to cause greater turbulence. Ship tracking data will provide early insight as it's released throughout February. The macros have attempted to gain control this morning with Nonfarm Payroll data coming in sharply higher than expected. The US dollar index quickly reversed and is now up over 800 points on the day, however, energies continue to lean positive. There’s growing chatter regarding where the bottom is for this market as this selloff approaches the December lows. $75 is looking like strong support for WTI but a breach could push oil back near $70, where the US may become a buyer to refill the SPR.
Crude
- The US Energy Department advised Congress to stop the sale of 26 million barrels from the SPR scheduled for this year.
- A further release from the SPR would prevent refilling as the pipeline can only go one direction at a time.
- The EU’s seaborne embargo of Russian refined products will go into effect on Sunday.
- The EU is set to announce the price cap for Russian oil products today.
- The Kremlin said today that the EU embargo on Russia’s refined oil products would lead to a further imbalance in the global energy markets.
- March WTI tested $75 support yesterday but did not manage to close below.
- Baker Hughes will report its rig count at 3:30 CT.
- US nonfarm payrolls were reported at 517k vs 185k est, which bolstered the dollar sharply higher.
- ISM Services PMI will be reported at 9:00 CT and could provide further macroeconomic influence.
- As of 8.03 am CST: Brent crude oil up $0.19 to $82.36, US dollar index up $0.791 to 102.537 while the nearby e-mini S&P 500 futures contract is down 48.25 to 4142.00.
Diesel
- AAA reports the national average retail diesel price at $4.665, down 1.5 cents from a month ago.
- Nearby diesel prices have fallen 30 cents this week.
Gasoline
- AAA reports the national average retail gas price at $3.491, up 27 cents from a month ago.
- Prompt daily RBOB traded below its 100-day moving average this week.
- Bloomberg data shows Chinese road traffic jumped 200% as of Feb 1st.
Propane
- Conway is trading at .8050 while Belvieu is trading at .8225.
- Conway is trading at 44% of crude.
- The US is exporting 59% of production as of 1/27/22.
Natural Gas
- US natural gas demand fell to 132.2 Bcf/d yesterday.
- US dry production fell to 95.2 Bcf/d yesterday.
- Overnight weather runs added 3 HDD’s through the two-week forecast.
- The EIA reported a 151 bcf draw for last week.
- Yesterday Freeport submitted a request to begin loading vessels with LNG.
Continuous Daily NG: Nearby natural gas has fallen below $2.50 this week as the 2-month selloff continues. Warm weather across the country has allowed a swift recovery of inventories due to low heating demand. Progress at Freeport has not caused this market to flinch, despite the prospect of an uptick in exports when operations resume.
