Outlook: Energies are starting the morning lower in what may be some risk-off sentiment ahead of the Fed Chair’s speech. Today’s speech is the first day of the semi-annual monetary policy report to congress. A hawkish stance could be supportive for the US dollar and negative towards energy while a dovish tone could cause the opposite. Providing additional downside today is reports that Chinese oil imports were down y/y in January in February. While that result was relatively expected, growth is projected to accelerate through the end of the year. US petroleum inventories are expected to have drawn down last week according to a Reuters poll. The API will report its inventory survey this afternoon at 3:30 CT.
Crude
- OPEC Chief Haitham Al-Ghais met with US shale executives yesterday in their first meeting since taking over in July.
- Kazakhstan has reportedly been struggling to find barrels to meet European demand as they look to fill the Russian supply void according to Bloomberg.
- A Kremlin spokesman said that western price caps on Russian crude oil and products have been set high enough that there has been no damage to Russian interest.
- China imported 84.1 million tons or 10.44 mbpd of oil in January and February, down 1.3% from a year earlier, according to government data.
- Energy Aspects expects Chinese imports to rise to 11.5 mbpd in Q2.
- French energy infrastructure continues to see disruption due to ongoing protests over the proposed increase to retirement age.
- Fed Chair Jerome Powell will testify in front of congress at 9:00 CT to review economics and monetary policy.
- The Fed will meet for the next interest rate decision on March 21-22nd.
- Reuters estimates crude stocks fell by 300,000 barrels last week.
- Prompt continuous WTI closed above its 100-day moving average yesterday near $80.07
- As of 7:53 am CST: Brent crude oil down $0.56 to $85.62, US dollar index up $0.174 to 104.524 while the nearby e-mini S&P 500 futures contract is up 4.25 to 4056.00.
Diesel
- Reuters estimates distillate stocks fell by 1.3 million barrels last week.
- Soft diesel demand has held back prices this week.
Gasoline
- Reuters estimates gasoline stocks fell by 1.9 million barrels last week.
- Nymex gasoline reached overbought territory on Monday as it closed at its highest level since October.
Propane
- Conway is trading at .8500 while Belvieu is trading at .9125.
- Conway is trading at 43% of crude.
- The US is exporting 65% of production as of 2/24/23.
Natural Gas
- US Natural gas demand rose to 104.3 Bcf yesterday.
- Weekend weather runs were unchanged through the two-week forecast.
- Warm weather revisions as winter winds down have continued to pressure gas lower in the absence of Freeport exports.
Continuous Daily RBOB: The prompt RBOB contract is approaching its 200-day moving average near $2.83. A breach of this resistance level could set the market up to fill the gap establish at the end of July. This range could be viewed as a mid-term upside target or a peak similar to last June.
