Outlook: Energies are off to a choppy start again today and trade remains very thin due to the holidays. Daily market interpretations can be challenging amidst thin trade but what’s more clear is the broader trend lower for energies is still intact. Outside markets have once again seen a holiday rally into the New Year supported by a dovish shift from the Fed this month. The energy markets will likely require more convincing and want to see real demand growth before bucking this downtrend on macros alone. Geopolitical risk still appears to be the best chance for a breakout move higher in 2024. Traders may feel a little saturated given the number of geopolitical events over the past year that didn’t amount to physical disruptions. Still, the risks of such an event become much more sensitive if the global market begins to tighten. We’ll look to the EIA report later this morning to give us an idea on where fundamentals sit in the US.
Crude
- Russia’s crude exports fell 600,000 bpd to 2.5 mbpd week-over-week.
- Trade flows have begun to resume in the Red Sea as increased naval patrol provides protection.
- Iraq and Iran plan to form a join committee to develop oil fields along with gas capturing and petrochemicals according to Bloomberg.
- The US dollar has fallen to its lowest levels since July.
- Reuters estimates crude stocks fell by 2.6 million barrels last week.
- The API survey showed crude stocks rose 1.8 million barrels last week.
- The EIA will report inventories today at 9:30 am CT.
- As of 8:07 am CST: Brent crude oil down $0.69 to $78.96, US dollar index up $0.113 to 101.099 while the nearby e-mini S&P 500 futures contract is down 3.25 to 4830.00.
Diesel
- Sinopec is reporting that China’s oil product demand is expected to slow 1.7% in 2024.
- Reuters estimates diesel stocks rose 600,000 barrels last week.
- The API survey showed diesel stocks rose by 300,000 barrels last week.
- Tomorrow is LTD for January HO.
Gasoline
- Reuters estimates gasoline stocks rose 200,000 barrels last week.
- The API survey showed gasoline stocks fell 500,000 barrels last week.
- Tomorrow is LTD for January RBOB.
Propane
- Conway is trading at .6625 while Belvieu is trading at .7150.
- Conway Swap Oct24-Mar25 strip trading ~.7500.
- OPIS estimates propane stocks fell by 1.8 million barrels last week.
Natural Gas
- Overnight weather runs removed 4 HDDs through the two-week forecast.
- Russia’s gas output rose to 58.3 Bcm, up 2.8% y/y.
- Reuters estimates natural gas stocks fell between 72 and 76 Bcf last week.
Continuous Daily WTI: Upside momentum is quickly fading with nearby WTI trading back below its 9-day MA.
