Outlook: Energies are edging higher this morning but are far from recouping yesterday’s losses. A bearish outlook from the Fed meeting minutes yesterday helped propel the market lower. The minutes showed the majority of officials agree that interest rates may need to continue to increase to combat inflation. The EIA will release its fundamental data this morning. The markets have not found a reason to respect improving global demand forecasts while domestic demand remains suppressed. Seasonally we see product inventories begin to fall accompanied by refinery turnarounds leading up to the summer driving season, but we have yet to see this trend start. Products inventories are again expected to see a modest increase based on market survey results, while crude inventories may be in store for another large increase.
Crude
- Russia said they plan to cut oil exports from its western ports by up to 25% in March.
- Yesterday’s Fed minutes hinted towards additional rate hikes, a bearish element for petroleum demand.
- Morgan Stanley has turned short-term bearish on crude but said oil demand will still grow 36% this year.
- Over the first six weeks of the year, US oil inventories have risen over 50 million barrels.
- The EIA will report its inventory survey at 10:00 CT.
- An industry survey yesterday afternoon showed US crude stocks rose by 9.9 million barrels last week, according to sources citing the API.
- Reuters is estimating crude stocks rose by 2.1 million barrels last week.
- As of 8:26 am CST: Brent crude oil up $0.93 to $81.53, US dollar index down $0.076 to 104.509 while the nearby e-mini S&P 500 futures contract is up 29.25 to 4028.00.
Diesel
- An industry survey yesterday afternoon show diesel inventories rose by 1.37 million barrels, according to sources citing the API.
- Reuters is estimating distillate stocks fell by 1.1 million barrels last week.
- India’s diesel demand is expected to grow by 4% this year, according to its government.
- India’s jet fuel demand is expected to grow by 16% this year.
Gasoline
- An industry survey yesterday afternoon showed gasoline inventories rose by 890,000 barrels, according to sources citing the API.
- Reuters is estimating gasoline stocks rose 100,000 barrels last week.
- India’s gasoline demand is expected to grow 8% this year, according to its government.
Propane
- Conway is trading at .7850 while Belvieu is trading at .8125.
- Conway is trading at 44% of crude.
- The US is exporting 78% of production as of 2/10/23.
- OPIS estimates propane stocks fell by 2.33 million barrels last week.
Natural Gas
- US Natural gas demand fell to 114.9 Bcf yesterday.
- Overnight weather runs removed 1 HDDs through the two-week forecast.
- Reuters expects a 67 Bcf withdrawal from storage for last week.
- The 5-year average drawdown is 177 Bcf.
Continuous daily diesel: The prompt diesel contract has continued to test $2.70 as resistance but has been unable to close below the mark. A bearish EIA report today could be enough to challenge it again today. Trade expects diesel inventories to build over 1 million barrels and east coast heating demand has remained soft.
