Outlook: Energies are poised for a strong start this morning with WTI and RBOB leading the complex higher. Chinese demand and short covering could be the main driver this morning as the month comes to an end today. Congestion data out of China remains relatively mixed with drivers choosing independent travel as opposed to public transit. The market will get a better idea of where China’s economy is trending with the release of their Manufacturing PMI tomorrow. US economic data for February will release later this week, and if the current trend continues, could act in opposition to the rising Chinese demand driver. The EIA will release inventory data tomorrow morning while the API will report it’s survey this afternoon. Reuters is looking for a small build in crude and gasoline and a small draw in diesel.
Crude
- OPEC’s quota-bound members undershot its output target by 880,000 bpd in February vs 920,000 bpd in January, according to a Reuters survey.
- Russian crude exports from its three western ports fell to 2.02 mbpd in February from 2.2 mbpd in January.
- Russia’s oil and gas revenue fell nearly 40% in January, according to the IEA.
- WTI futures have fallen for 8 of the last 9 months.
- WTI’s prompt spread closed at its highest level this year at -13 cents.
- A Reuters poll of 49 economists projects that WTI crude will average $83.94 in 2023, down from the previous month's forecast of $85.40
- Reuters estimates crude stocks rose by 400,000 barrels last week.
- The API will report its inventory survey at 3:30 CT today.
- International Energy Week is underway in London which could provide additional market dialogue this week.
- As of 8:26 am CST: Brent crude oil up $1.65 to $84.10, US dollar index down $0.109 to 104.564 while the nearby e-mini S&P 500 futures contract is down 2.25 to 3986.00.
Diesel
- Reuters estimates diesel stocks fell 500,000 barrels last week.
- Shipments of Russian gasoil-type fuels to India reached a record in February.
- China’s diesel exports are forecast to average 310,000 bpd from June – October, up 100,000 bpd y/y, but below November and December levels, according to FGE.
- Today is last trade day for March diesel.
Gasoline
- Reuters estimates gasoline stocks rose by 700,000 barrels last week.
- Several US refineries experienced unplanned downtime on Monday.
- European gasoline arrivals in the US rose 21% w/w for the week through February 23rd.
- Today is last trade day for March gasoline.
Propane
- Conway is trading at .7750 while Belvieu is trading at .8050.
- Conway is trading at 43% of crude.
- The US is exporting 69% of production as of 2/17/23.
Natural Gas
- US Natural gas demand fell to 109.1 Bcf yesterday.
- Overnight weather runs were unchanged through the two-week forecast.
- Yesterday, Freeport LNG requested full restart of Train 1.
WTI Crude: US crude stockpiles have risen to their highest levels since May of 2021 which have provided a bearish fundamental dynamic to start this year. With oil falling for 8 of the last 9 months, the market may require a series shift in the dynamic to change the current trend. China will look to fill that role if their economy can rebound this year as many analysts predict.
