Outlook: The choppiness in the energy sector looks to continue today with crude and products bouncing in positive territory after lifting off earlier lows. Nearby WTI came within 1 tick of challenging the November 16th low and the rejection may be acknowledgement of support. Commentary from OPEC members has continued to provide mixed signals with Russia saying the group is ready to strengthen cuts in Q1 to eliminate speculation and volatility. This comment came not long after the Kremlin commented that OPEC cuts would take time to kick in. The market will likely require more conviction for a true sentiment shift. We’ll look for economic data later this morning and the API inventory survey this afternoon for fresh drivers today.
Crude
- The Kremlin said today that OPEC+ voluntary cuts will take time to kick in.
- The market remains skeptical that voluntary cuts will be fully implemented.
- Moody’s lowered their Chinese credit rating from stable to negative, due to increasing debt.
- Fighting has resumed in the Israel-Hamas war and the attacks on three commercial vessels in the Red Sea has yet to spill over to energy futures.
- Russia’s four-week average seaborne crude exports have fallen to their lowest level in three months due to inclement weather in the Black Sea.
- The US said it may not be able to take advantage of low crude prices to refill the SPR due to physical constraints and cavern maintenance.
- Reuters estimates crude stocks fell by 2.3 million barrels last week.
- The API will report its inventory survey this afternoon at 3:30 pm CT.
- US ISM Services and JOLTS Jobs Openings will be reported at 9:00 am CT.
- As of 8:28 am CST: Brent crude oil up $0.52 to $78.54, US dollar index up $0.0340 to 103.752 while the nearby e-mini S&P 500 futures contract is down 16.25 to 4560.00.
Diesel
- Reuters estimates diesel stocks rose by 1 million barrels last week.
- Smaller backwardation in the prompt spread and soft regional basis may be advantageous for filling storage and hedging until delivery.
Gasoline
- Reuters estimates gasoline stocks rose by 1.2 million barrels last week.
- The prompt RBOB crack rose to its highest level since September 21st yesterday as it continues its steady trend higher.
Propane
- Conway is trading at .6700 while Belvieu is trading at .7300.
- Conway Swap Oct24-Mar25 strip trading ~.7300.
- Propane saw another strong move higher on Friday despite the weakness in crude.
- Seasonal pressure may be limiting downside for propane.
Natural Gas
- Overnight weather runs removed 5 HDDs through the two-week forecast.
- France was the primary destination for US LNG with over two-thirds of all exports heading to Europe.
- Reuters estimates nat gas stocks fell between 70 and 107 Bcf last week.
Continuous Daily WTI: Crude tested the recent November low of $72.16 today. Look for this level to act as support for any downside move this week.
