Outlook: Energies started the morning with compelling gains but momentum has quickly faded as more traders return to their desks following the holidays. Reports that US helicopters took down a Houthi boat killing 10 sparked concern that the conflict could escalate. Supporting that concern were reports that Iran launched a warship in the Red Sea in response. Additional bullish support was provided by a drop in global crude in floating storage and China’s issue of crude oil import quotas. China’s import quotas appear front-loaded in January which could create some unexpected demand but overall fell in-line with 2023 quotas. Chinese demand will again be a focal point this year along with the political risk involving Taiwan. While overall market direction for the year remains in question, volatility appears to be a safer bet given the slough of pivotal drivers on deck for 2024.
Crude
- Russia’s seaborne crude exports rose 230,000 bpd last week to 3.46 mbpd.
- China issued 179.01 million metric tons (3.6 mbpd) of crude oil imports for 2024, which is 60% more than the January batch last year.
- US crude imports fell to their lowest level this year at 6.135 mbpd in October.
- The US took down a Houthi boat on Sunday killing 10 in the Red Sea.
- Global crude in floating storage fell by 16% last week according to Vortexa.
- Baker Hughes reported US oil rigs rose by 2 to 500 last week.
- OPEC+ is planning a monitoring meeting for early February.
- S&P global manufacturing PMI will be reported at 8:45am CT.
- As of 8:27 am CST: Brent crude oil up $0.54 to $77.69, US dollar index up $0.124 to 101.353 while the nearby e-mini S&P 500 futures contract is down 3.25 to 4828.00.
Diesel
- Managed money heating oil net length rose by 1.3k lots last week.
- Russia plans to raise diesel exports by 18% or 817,000 bpd over December levels.
- At least four tankers carrying diesel and jet fuel from the Middle East and India to Europe are sailing around Africa to avoid the Red Sea.
Gasoline
- Managed money RBOB net length fell by 1k lots last week.
Propane
- Conway is trading at .6825 while Belvieu is trading at .7100.
- Conway Swap Oct24-Mar25 strip trading ~.7500.
Natural Gas
- Overnight weather runs removed 1 HDDs through the two-week forecast.
- US heating demand for this week is expected to be 31 HDDs less than historical averages.
- Baker Hughes reports nat gas rigs were unchanged last week.
Continuous 5min WTI: A volatile start to the year for WTI which has already erased gains of nearly $2.00 earlier in the session.
