Outlook: The energy complex is mixed to start today’s session with crude and gasoline trading lower while diesel hangs on to marginal gains. February CPI was released this morning which was reported in line with estimates. The market initially sold the report but has since rebounded from its lows. With February data complete, next week's Fed meeting will be the next significant macro driver. Following the banking shakeup, projections have shifted towards a 25 bps increase or less for the next interest rate hike. A dovish pivot from the Fed could be supportive for energy demand if recession fears don’t overpower the narrative. OPEC released its monthly report today leaving global oil demand growth unchanged while increasing Chinese demand for 2023. The group is likely balancing countries dealing with economic tightening which could cause demand destruction vs China which is in growth mode. The API will report its survey this afternoon and the EIA will report official data tomorrow morning.
- OPEC says its oil output rose by 117,000 bpd in February to 28.92 mbpd.
- OPEC increased its Chinese oil demand projection by 120,000 bpd to 710,000 bpd for 2023 but left its 2023 global oil demand growth unchanged at 2.32 mbpd.
- US Treasury officials said today that 75% of Russian seaborne oil is being sold outside the G-7 price cap.
- In the seven days to March 10, Russia’s seaborne crude exports increased by 40% or 3.33 mbpd.
- According to Reuters calculations, Russia’s offline primary oil refining capacity is set to increase to 86% in April vs 78% in March.
- President Biden approved the ConocoPhillips oil development in Alaska yesterday. The field will produce roughly 180,000 bpd of oil when complete.
- China’s annual consumer inflation slowed to the lowest rate in a year rising 1% in February, according to the National Bureau of Statistics.
- Reuters estimates crude stocks rose by 600,000 barrels last week.
- The API will report its inventory survey today at 3:30 CT.
- As of 8:07 am CST: Brent crude oil down $1.08 to $79.69, US dollar index down $0.070 to 103.525 while the nearby e-mini S&P 500 futures contract is up 46.25 to 3903.00.
- Reuters estimates distillate stocks fell by 1.2 million barrels last week.
- Diesel may find support with March weather models forecasting colder than 10-year average temperatures.
- Reuters estimates gasoline stocks fell by 2.2 million barrels last week.
- March shipments of fuel from Asia to America increased by 95,000 tons w/w.
- 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.
- US Natural gas demand fell to 110.8 Bcf yesterday.
- Weekend weather runs added 5 HDDs through the two-week forecast.
- The end of March is expected to be colder than the 10-year average which may continue to support the market.
Russian Crude Exports: Russia’s seaborne crude exports made a sharp rebound week-over-week of 3.3 mbpd. Russia has said they plan to cut oil production in March by 500,000 bpd, however, exports have not responded lower if the cut is underway.