Outlook: The energy complex is working marginally higher as it looks to recoup some of yesterday’s losses. The headlines overnight certainly leaned bullish with reports of a deadly explosion in Iran, increasing tensions in the Middle East, and reports of a shut-in at Libya’s El Sharara oil field. The market still appears somewhat desensitized to geopolitical conflicts unless they directly impact supply. Additionally, the preliminary Reuters poll is suggesting crude stocks fell by 3 million barrels last week. Due to the market holiday on Monday, the API will report its survey this afternoon and the EIA will report tomorrow at 10:00 am CT. Energies may be facing headwinds working against equities and a higher dollar today. The timeline for rate cuts continues to fluctuate creating volatility based on expectations for economic health this year.
Crude
- Libya’s El Sharara 300,000 bpd oil field has been shut in due to protests per Argus.
- Tensions in the Middle East have risen following an explosion that killed over 70 in Kerman, Iran today.
- The conflict in the Red Sea remains delicate with Iranian warships present.
- Iranian crude exports are flowing at nearly 2 mbpd currently.
- Reuters expects WTI crude to average $78.84 in 2024.
- Reuters estimates crude stocks fell by 3 million barrels last week.
- The US dollar had its single-best day since March 2023 yesterday.
- US December Manufacturing PMI will be reported at 9:00am CT along with JOLTS Jobs.
- The Fed minutes will be released at 1:00am CT.
- The API will report its inventory survey this afternoon at 3:30 pm CT.
- As of 8:31 am CST: Brent crude oil up $1.11 to $77.00, US dollar index up $0.344 to 102.545 while the nearby e-mini S&P 500 futures contract is down 23.25 to 4762.00.
Diesel
- Reuters estimates diesel stocks rose by 900,000 barrels last week.
- Chinese diesel exports are expected to rise 191% m/m in January.
Gasoline
- Reuters estimates gasoline stocks rose 700,000 barrels last week.
- Chinese gasoline exports are expected to rise 74% m/m in January.
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 4 HDDs through the two-week forecast.
- US heating demand for this week is expected to be 31 HDDs less than historical averages.
- Reuters estimates natural gas stocks fell between 17 and 51 Bcf last week.
Continuous Daily USD: The US dollar had its best day since March yesterday and is looking to extend gains further today. Dovish bets may be retreated allowing for the move higher.
