Outlook: Energies are looking strong for a third consecutive session this morning. After approaching oversold levels, it appears strong buying activity is helping fuel the rally. Comments from the Fed came off less hawkish than expected yesterday and helped energies close near their daily highs. The EIA released a slough of data yesterday in their monthly STEO report. Most notably, they increased their 2023 and 2024 demand forecast and also increased their 2023 Russian oil production forecast. The EIA will release its inventory data this morning at 9:30 CT. Trade estimates are mixed for crude while products are expected to build.
Crude
- Iraq’s pipeline flows to Ceyhan resumed flows late yesterday after being disrupted by an earthquake early this week.
- An Iranian official said on Wednesday that OPEC+ will likely stick with their current output cut again when they meet next month.
- Fed Chair Jerome Powell said on Tuesday that strong jobs data last week affirmed that the central bank has some way to go on raising rates.
- The EIA lowered its 2024 US crude output forecast to 12.65 mbpd compared to the previous estimate of 12.81 mbpd but increased its 2023 forecast to 12.49 mbpd vs 12.45 mbpd.
- The EIA raised its 2023 world oil demand forecast by 60,000 bpd to a 1.11 mbpd y/y increase and raised its 2024 forecast by 70,000 bpd to 1.79 mbpd y/y.
- The EIA increased its 2023 Russian oil production outlook by 400,000 bpd to 9.9 mbpd.
- Crude stocks at Cushing rose by 830,000 barrels last week, according to AlphaBBL data.
- Reuters estimates crude stocks rose by 2.5 million barrels last week.
- An industry survey yesterday afternoon showed crude stocks fell 2.1 million barrels last week, according to sources citing the API.
- As of 8:01 am CST: Brent crude oil up $0.81 to $84.50, US dollar index down $0.129 to 103.298 while the nearby e-mini S&P 500 futures contract is down 21.25 to 4154.00.
Diesel
- Reuters estimates diesel inventories rose by 100,000 barrels last week.
- An industry survey yesterday afternoon showed diesel stocks rose 1.1 million barrels last week, according to sources citing the API.
Gasoline
- Reuters estimates gasoline inventories rose 1.4 million barrels last week.
- An industry survey yesterday afternoon showed gasoline stocks rose 5.2 million barrels, according to sources citing the API.
- The EIA sees retail gasoline averaging $3.39 in 2023 per their February STEO report.
Propane
- Conway is trading at .7775 while Belvieu is trading at .8175.
- Conway is trading at 42% of crude.
- The US is exporting 59% of production as of 1/27/22.
- An OPIS survey estimates propane stocks fell by 2.1 million barrels last week.
Natural Gas
- US natural gas demand fell to 108.9 Bcf/d yesterday.
- US dry production increased to 95.5 Bcf/d yesterday.
- Overnight weather runs were unchanged through the two-week forecast.
- The EIA estimates spot natural gas prices will average $3.40 in 2023.
Continuous Daily WTI: The prompt WTI contract has moved back above its 50-day moving average (Blue Line). The 100-day moving average (Purple Line) may be the next short-term target if upside momentum continues. $80 may provide psychological resistance before a test of the 100-day.
