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Outlook: The energy complex is mixed to start today’s session with crude and diesel inching higher while gasoline trades down over a penny. There appears to be significant support in the market at these levels despite bearish developments over the last several days. The EIA saw net petroleum inventories increase by 3.5 million barrels last week which includes another significant build in US crude stocks. However, strong crude exports helped flip the US back to a net exporter of petroleum products as a whole. Economic reports have also continued to show signs of resilient inflation. Core Personal Consumption Expenditures, which measures the average amount of money that consumers spend in a month excluding food and energy, unexpectedly rose in January. A high reading is typically bullish for the US dollar index, which puts downward pressure on dollar-based commodities. Expect the tug-of-war between rising Chinese demand and a gloomy economic outlook to continue.
Crude
- JP Morgan said today that it sees short-term oil prices more likely to drift toward $70 than rise as global growth headwinds strengthen.
- Russia said they plan to cut oil exports from its western ports by up to 25% in March.
- Russia will cut crude production by 500,000 bpd in March.
- The EIA reported a 7.6 million barrel build in crude stocks for last week.
- US net oil imports fell by 1.3 mbpd.
- US crude stocks have increased for 9 consecutive weeks.
- February Michigan Consumer Sentiment will be released at 9:00 CT.
- US annual Core PCE inflation rose 4.7% in January vs 4.3% expected.
- As of 8:07 am CST: Brent crude oil up $0.19 to $82.40, US dollar index up $0.455 to 105.053 while the nearby e-mini S&P 500 futures contract is down 52.25 to 3966.00.
Diesel
- The EIA reported a 2.7 million barrel build in diesel stocks for last week.
- Diesel demand fell by 3.2% w/w.
- The prompt diesel crack fell to its lowest level since March yesterday at $36.52.
Gasoline
- The EIA reported a 1.8 million barrel draw in gasoline stocks for last week.
- Gasoline demand rose 7.7% w/w.
Propane
- Conway is trading at .7750 while Belvieu is trading at .8025.
- Conway is trading at 43% of crude.
- The US is exporting 69% of production as of 2/17/23.
- The EIA reported a 2.9 million barrel draw in propane stocks for last week.
Natural Gas
- US Natural gas demand fell to 114.9 Bcf yesterday.
- Overnight weather runs removed 2 HDDs through the two-week forecast.
- The EIA reported a 71 Bcf withdrawal from storage last week.
- The 5-year average drawdown is 177 Bcf.
Russian Diesel Exports: With refined product targeted sanctions in effect against Russia, a record amount of diesel is afloat at sea. Roughly 24 million barrels of Russian diesel-type fuel is sitting on vessel storage according to Kpler data. While vessels traditionally would head to Poland or Germany, they must travel longer distances to find a home, contributing to larger floating volumes.
