Outlook: The Energy market is mixed this morning with WTI trading lower while products hang on to marginal gains. The fundamentals between the projected crude build and reports of an increase to pre-sanction levels for Russian production appear to be overpowering positive Chinese economic data. Chinese manufacturing expanded at its fastest pace in a decade which is a key driver for domestic demand growth. Chinese fuel exports are expected to fall sharply this month as quotas drop while domestic demand grows. If the trade is concerned about another large crude build as projected by yesterday’s survey, we could see trade direction shift if the EIA doesn’t follow suit. With refinery maintenance season underway, crude stocks traditionally see builds until the end of May while product inventories observe drawdowns. The EIA will confirm inventories at 9:30 CT this morning.
- Russia’s oil production reached pre-sanction levels for the first time in February, according to Kommersant business daily.
- China’s manufacturing and non-manufacturing PMI showed expansion above expectations for February.
- China’s manufacturing expanded at the fastest pace in over a decade in February.
- An industry survey yesterday afternoon showed crude stocks rose by 6.2 million barrels, according to sources citing the API.
- Reuters estimates crude stocks rose by 500,000 barrels last week.
- US crude inventories have risen 31 million barrels over the last four weeks.
- US crude production fell to 12.1 mbpd in December, according to the EIA’s monthly petroleum supply report.
- As of 7:56 am CST: Brent crude oil down $0.51 to $82.94, US dollar index down $0.530 to 104.339 while the nearby e-mini S&P 500 futures contract is up 10.25 to 3964.00.
- An industry survey yesterday afternoon showed diesel stocks fell by 341,000 barrels last week, according to sources citing the API.
- Reuters estimates diesel stocks fell by 500,000 barrels last week.
- According to Kpler, around 1.9 million barrels of Russian diesel-type fuel are sitting in floating storage due to weather and sanction-related disruptions.
- An industry survey yesterday afternoon showed gasoline stocks fell by 1.77 million barrels last week, according to sources citing the API.
- Reuters estimates gasoline stocks rose by 500,000 barrels last week.
- Conway is trading at .7950 while Belvieu is trading at .8300.
- Conway is trading at 43% of crude.
- The US is exporting 69% of production as of 2/17/23.
- OPIS estimates crude inventories will fall by around 2 million barrels last week.
- US Natural gas demand rose to 109.9 Bcf yesterday.
- Overnight weather runs were unchanged through the two-week forecast.
- The EIA is expected to report a 72 Bcf withdrawal for last week when it reports tomorrow.
Continuous Daily RBOB: The prompt RBOB contract saw a nice gap higher with the expiration of the March contract. This gap is traditional with the transition back to summer grade RVP pricing into the April contract. Yesterday’s market survey showed a larger-than-expected draw in gasoline stocks which could provide mid-morning support if the EIA confirms.