Outlook: Energies are extending their losses to start today’s session. A continuation of concern surrounding global economic headwinds has taken control of the market. The Fed’s hawkish testimony yesterday also came after Chinese demand was reported below year-ago levels for January and February. The pause in upward momentum from China, which has been the main bullish driver, may have allowed this selloff to extend further than expected. It’s likely this momentum will return with the bulk of Chinese demand growth expected in the second half of the year. Conversely, economic headwinds could grow stronger if Friday’s jobs report and next week’s CPI report reflect resilient inflation. The EIA will report inventories this morning at 9:30 CT. Estimates are all over the board but the most recent industry survey from yesterday afternoon looked bearish if confirmed.
Crude
- The EIA lowered its 2023 crude output forecast to 12.44 mbpd vs 12.49 mbpd in its February STEO report.
- The EIA raised its Russian production forecast to 10.3 mbpd vs 9.9 mbpd previously.
- Barclays lowered its 2023 WTI oil forecast by $7 to $87
- Fed Chair Jerome Powell will testify again today at 9:00 CT
- The Fed will meet for the next interest rate decision on March 21-22nd.
- Reuters estimates crude stocks rose by 400,000 barrels last week.
- An industry survey yesterday afternoon showed crude stocks fell by 3.8 million barrels last week, according to sources citing the API.
- The EIA will release its inventory data this morning at 9:30 CT.
- As of 7:56 am CST: Brent crude oil down $0.41 to $82.87, US dollar index up $0.054 to 105.669 while the nearby e-mini S&P 500 futures contract is up 1.25 to 3991.00.
Diesel
- Reuters estimates distillate stocks fell by 1.0 million barrels last week.
- An industry survey yesterday afternoon showed diesel stocks rose by 1.9 million barrels last week, according to sources citing the API.
- At least two tankers with Russian diesel-type fuel are floating of the coast of Brazil, according to Bloomberg tanker tracking data.
Gasoline
- Reuters estimates gasoline stocks fell by 1.9 million barrels last week.
- An industry survey yesterday afternoon showed gasoline stocks rose by 1.8 million barrels last week, according to sources citing the API.
Propane
- Conway is trading at .8200 while Belvieu is trading at .8800.
- Conway is trading at 43% of crude.
- The US is exporting 65% of production as of 2/24/23.
- OPIS estimates propane inventories fell by 1.84 million barrels last week.
Natural Gas
- US Natural gas demand rose to 104.3 Bcf yesterday.
- Weekend weather runs added 9 HDDs through the two-week forecast.
- Industry forecasts are for a draw between 79-87 Bcf for last week.
- The EU will begin purchasing natural gas in April and focus on bringing in products to smaller and medium size companies.
Continuous Daily WTI: Yesterday’s testimony by Fed Chair Jerome Powell sent the market sharply lower, breaking through multiple technical support levels. The selloff pushed the market below its 100-day and 50-day moving averages in one swing. Look for phycological support near $75 if Powell maintains a hawkish stance today.
