Morning Highlights
Morning Highlights

12-18-25 Energies rally on Red Sea disruptions...

Riley Schwieger

Dec 18, 2023

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Outlook: Energies are starting the week higher as escalation in the Red Sea threatens to disrupt trade flows. The Red Sea and specifically the Suez Canal traffics 12% of global trade and a shutdown would add significant time and freight costs for those that typically pass through. European natural gas prices have also seen a spike this morning in anticipation of potential delays to receive LNG. With a bottom looking to be formed for energies, traders are likely feeling more confident in adding length with unplanned supply disruptions. A shift in economic sentiment is also allowing diesel to rally above others despite the weather-related headwinds. If economic reports lean dovish this week, momentum could lead to a nice run-up ahead of the holiday weekend.        


  • BP said today it has temporarily paused shipping through the Red Sea after more attacks were reported over the weekend.
  • Two other major freight firms said they would avoid the Suez Canal Friday and Saturday due to Houthi militant attacks.
  • Nearly 12% of global seaborne trade passes through the Suez Canal.
  • Russia may deepen exports cuts in Dec by 50,000 bpd, which may be due to storms and maintenance over the weekend.
  • Managed money participants have the lowest net long position in WTI and Brent since 2011.
  • Goldman Sachs expects five 25 bps rate cuts in 2024.
  • Baker Hughes reported US oil rig counts fell by 2 to 501.
  • As of 8:39 am CST: Brent crude oil up $2.20 to $78.75, US dollar index down $0.112 to 102.438 while the nearby e-mini S&P 500 futures contract is up 17.25 to 4785.00.


  • Diesel continues to find strength despite warm weather headwinds impacting heading demand primarily on the East Coast.
  • The prompt diesel spread remains under 3 cents for those looking to roll short hedges over the next two weeks.
  • In the US, a record 7.5 million people are expected to fly from Dec 23 to Jan 1, marking the busiest year-end travel season on record per Bloomberg.


  • RBOB saw a weekly rise last week for the first time in 7 weeks.
  • RBOB is trending to test resistance at its 50-day moving average at $2.1964


  • Conway is trading at .6075 while Belvieu is trading at .6650.
  • Conway Swap Oct24-Mar25 strip trading ~.7100.

Natural Gas

  • Overnight weather runs removed 3 HDDs through the two-week forecast.
  • Baker Hughes reported natural gas rig counts were unchanged at 119 last week.
  • Warm weather forecasts will continue to limit the upside in natural gas futures.

Continuous Weekly WTI: Crude rejected a close below its 200-week moving average for the third consecutive week.