Outlook: Energies are relatively mixed this morning while diesel is leading the complex lower. Both diesel and WTI have tipped oversold however macro momentum could easily ignore that today. The ECB will be announcing its rate hike today and will likely be out by the time this hits your inbox. Expectations are for a 50 basis point increase, however, the shake-up in the banking industry has that increase a little less cemented in. The US will announce its next rate decision next week on Wednesday. The global fundamentals are expected to stay bearish for the first half of this year which has made it tough for domestic fundamentals to gain traction. US exports have remained strong this year and crude stocks on the east coast have dipped to their lowest level on record. Europe has looked to the US to replace the lost Russian crude supply and that trend is expected to continue. The market will continue to watch economic stability for a market driver and whether or not the US steps in as a buyer or OPEC+ adjusts production.
Crude
- The fall in crude prices has renewed expectations for the US to refill the SPR, which sits at 40-year lows.
- Energy Aspects expected OPEC+ to let markets settle before addressing any adjustments.
- Bloomberg suggests that Russia is unlikely to fully undertake the March oil output reduction of 500,000 bpd.
- Exxon Mobil announced the startup of its 250,000 bpd expansion at the Beaumont, Texas refinery. The refinery now has a total refining capacity of 630,000 bpd.
- The IEF said Saudi Arabia’s crude exports rose to 7.66 mbpd in January, up from 7.44 mbpd in December, citing JODI data.
- WTI closed in oversold territory for the first time since December 2021.
- The EIA reported US crude stocks rose by 1.5 million barrels last week.
- East Coast crude stocks fell to their lowest level on record last week.
- US crude exports rose by 1.6 mbpd to 5.027 mbpd last week.
- Europe is expected to import a record amount of US crude this month.
- The ECB will announce its next rate decision at 8:15 CT today.
- As of 7:48 am CST: Brent crude oil down $0.14 to $73.55, US dollar index down $0.255 to 104.381 while the nearby e-mini S&P 500 futures contract is down 14.25 to 3878.00.
Diesel
- Continuous daily diesel closed below its lower Bollinger band yesterday.
- The EIA reported diesel stocks fell by 2.5 million barrels last week.
- Diesel exports rose 6.8% w/w.
- Singapore middle distillate stocks rose 6.2% w/w
Gasoline
- The EIA reported gasoline stocks fell by 2 million barrels last week.
- Gasoline exports rose 7.2% w/w.
- Singapore light distillates rose 8.7% w/w
Propane
- Conway is trading at .6900 while Belvieu is trading at .7150.
- Conway is trading at 43% of crude.
- The US is exporting 72% of production as of 3/3/23.
- The EIA reported an unexpected build of 917,000 for propane stocks last week.
Natural Gas
- US Natural gas demand fell to 109.6 Bcf yesterday.
- Weekend weather runs removed 2 HDDs through the two-week forecast.
- The EIA is expected to report a 64 bcf withdrawal from storage for last week.
- The 5-year average draw is 77 Bcf.
Crude Oil: Banks and other financial institutions usually take on futures positions to offset the hedging they offer for oil producers. With sharp selloffs, firms can be forced to quickly exit positions to reduce exposure and limit losses. We likely saw this in both Brent and WTI yesterday as market participants were flushed out.
