Outlook: Energies are finding a bid again today with another attack reported in the Red Sea. This time a vessel previously seized by the US for carrying illicit Iranian oil was hijacked and forced to reroute to Iran. Escalations seem to be ramping up which leaves reason to believe the US and its allies may react with force. Goldman estimates that roughly 15% of crude flows have been disrupted so far and shippers have been reluctant to retest the waters. While flows are technically disrupted, alternate routes are available allowing for product to reach its destination albeit at a slower pace. In bearish news, Asian demand did not respond to the lower Saudi price cut this week with similar purchases planned for Feb from Jan. Woodmac expects China to account for 25% of global oil demand growth this year, and similar to last year, leaves room for disappointment. We’ll get a fresh round of import/export data for December tonight for further insight.
Crude
- A tanker previously seized by the US for carrying illicit Iranian oil has been hijacked off the coast of Oman and forced to alter course to Iran.
- The amount of oil exports shipped through the Red see has dropped 900,000 bpd (15% decline) since the conflicts began according to Goldman Sachs citing Kpler data.
- Chinese and other Asian refiners requested similar volumes for February compared to January despite the Saudi’s recent price cut which will likely be viewed as bearish.
- Wood Mackenzie expects global oil demand to increase by 2 million bpd in 2024 with China accounting for 25% of demand growth.
- Russia’s oil and gas budget revenue fell 24% in 2023 due to lower prices and sanctions increasing costs.
- The EIA reported US crude stocks rose 1.3 million barrels last week.
- US crude exports fell 37% or 1.9 mbpd to 3.3 mbpd after rising above 5 mbpd in the previous week.
- US December CPI was reported at 3.4% vs 3.2% est.
- As of 7:43 am CST: Brent crude oil up $1.31 to $78.12, US dollar index up $0.044 to 102.406 while the nearby e-mini S&P 500 futures contract is down 3.50 to 4819.00.
Diesel
- The EIA reported US diesel inventories rose by 6.5 million barrels last week.
- After rising 16.5 million barrels over a two-week period, diesel inventories sit 4% below 5-year average levels.
- 4-week average diesel demand sits 4.2% below year-ago levels.
Gasoline
- The EIA reported gasoline stocks rose 18 million barrels last week.
- After rising over 18 million barrels over the last two weeks, gasoline stocks sit 1% above 5-year average levels.
- 4-week average gasoline demand sits 3.2% above 5-year average levels.
Propane
- Conway is trading at .7600 while Belvieu is trading at .7775.
- Conway Swap Oct24-Mar25 strip trading ~.7700.
- The EIA reported a larger than expected draw of 3.5 million barrels for last week which helped propane make another strong move higher yesterday.
Natural Gas
- Overnight weather runs removed 3 HDDs through the two-week forecast.
- Freeze-offs will remain an upside risk in Texas through the middle of January.
- Reuters estimates nat gas stocks fell between 104-111 bcf last week.
- The EIA will report inventories at 9:30 am CT.
Continuous Weekly Propane:
