Outlook: Energies are working lower to start today's session with crude and products all observing losses. Demand concerns continue to deny upward momentum in the market. The concerns are derived from the expectations for additional interest rate hikes to combat resilient inflation. The Fed meeting minutes will be released mid-day to provide further indication of what officials are projecting. Chinese demand growth will likely be the catalyst to establish a floor in the market, however, as long as their exports remain elevated, the upside has been limited. The API will report its inventory survey this afternoon. Reuters poll is suggesting a build in crude and a draw in both gas and diesel for last week.
Crude
- The Caspian pipeline, which carries Kazakhstan’s crude exports, stopped accepting crude due to storms in the Black Sea.
- Kazakhstan’s state-run pipeline Kaztransoil applied to export oil to Germany via the Druzhba pipeline to replace Russian exports. They intend to send 1.2mm tons of crude to Germany this year.
- Morgan Stanley raised its oil demand growth estimate for this year to 1.9 million bpd, up from 1.4 mbpd previously.
- The Fed will release the minutes of its latest meeting today at 1:00 CT.
- US home sales posted its 12th consecutive monthly drop in January.
- The API will report its inventory survey today at 3:30 CT.
- Reuters is estimating crude stocks rose by 1.2 million barrels last week.
- As of 8:52 am CST: Brent crude oil down $0.77 to $82.28, US dollar index down $0.096 to 104.079 while the nearby e-mini S&P 500 futures contract is up 8.25 to 4013.00.
Diesel
- Reuters is estimating distillate stocks fell by 1 million barrels last week.
- Diesel prices have remained muted and sit in a vulnerable position to dip below critical support near the December low if the EIA reveals bearish fundamentals.
Gasoline
- Reuters is estimating gasoline stocks fell by 600,000 barrels last week.
- The Suncor refinery in Denver was cleared to restart 1 of 3 units after a vapor release incident yesterday.
Propane
- Conway is trading at .7900 while Belvieu is trading at .8300.
- Conway is trading at 44% of crude.
- The US is exporting 78% of production as of 2/10/23.
Natural Gas
- US Natural gas demand rose to 107.7 Bcf yesterday.
- Overnight weather runs added 1 HDDs through the two-week forecast.
- FERC approved operations on liquefication for train 2 and train 3 at Freeports LNG’s facility. Train 1 is still waiting for approval.
- Reuters reports that European countries reduced natural gas use from August to January by 19.3% compared to 5-year averages.
Continuous daily Natural Gas: The prompt natural gas contract dipped below $2.00 for the first time since June 2021 this morning. Natural gas has continued to find weakness on warm weather and a slower-than-expected restart for Freeport LNG. Last trade day for the March contract is Friday and there is currently a ~14 cent carry to the April contract.
