Outlook: The energy complex is under heavy pressure this morning as macroeconomic fears escalated over the weekend. Additional banks have come under pressure following the collapse of Silicon Valley Bank and the contagion fear has become very real. Just as steam was building for the Fed to increase rates by 50 bps during their session next week, Goldman Sachs has all but reversed their estimate and expects no rate increase following the weekends' events. The economy is showing signs of fragility which has reignited recession fears, which ultimately is bearish for energy demand. February inflation data is due to be released tomorrow morning. Expectations are for inflation to fall from 6.4% in January to 6% in February. If inflation runs hotter than expected, the Fed could be faced with an increasingly more difficult decision next week.
Crude
- Crude prices are being pressured after the collapse of Silicon Valley Bank on Friday and the fear of contagion.
- The market did briefly trade higher overnight as regulators assured at-risk deposits would be safe.
- State regulators also closed Signature Bank in New York on Sunday.
- Goldman Sachs now expects the Fed will pause rate hikes at their meeting next weekend.
- India has unofficially stated it won’t breach western sanctions, including the $60 oil price cap.
- Saudi Aramco increased its dividend and said it would hike spending following a surge of cashflow in 2022.
- President Biden is limiting oil leasing in Artic waters, taking measures to expand conservation while also preparing approval of ConocoPhillips oil development in that region.
- Baker Hughes reported US oil rigs declined by 2 last week to 590.
- February CPI will be released tomorrow at 7:30 CT.
- As of 8:07 am CST: Brent crude oil down $3.70 to $79.08, US dollar index down $0.632 to 103.944 while the nearby e-mini S&P 500 futures contract is down 26.25 to 3833.00.
Diesel
- Global jet fuel demand is set to grow to 5.6 mbpd this week, which would mark seven consecutive weeks of growth.
- The February 21st COT report showed managed money traders were net long 17,003 contracts after net buying 59 contracts.
Gasoline
- Workers at the TotalEnergies Donges refinery in France have extended their strike through March 16th.
- The February 21st COT report showed managed money traders were net long 55,396 contracts after decreasing length by 3,950.
Propane
- Conway is trading at .7500 while Belvieu is trading at .8150.
- Conway is trading at 41% of crude.
- The US is exporting 57% of production as of 3/3/23.
Natural Gas
- US Natural gas demand fell to 111.1 Bcf yesterday.
- Weekend weather runs added 6 HDDs through the two-week forecast.
- Baker Hughes reported US natural gas rigs fell by 1 last week to 153.
Continuous Daily WTI: Crude has dipped down near critical support today following a macro-driven selloff. This range near $70 has provided strong support with the potential for the US to begin purchasing oil to refill the SPR. The US has also stated market stability as a factor to when they begin purchasing, which seems far from what we are seeing today.
