Outlook: Energies are in positive territory coming out of the shortened session yesterday. We’re likely seeing support today from the cold weather presenting an elevated chance for refinery issues while multiple sites in Texas have reported flaring events. Additionally, Red Sea tensions remain high with another shipper suspending flow indefinitely. Despite many proceeding with caution, Russian flows to Asia through the Red Sea have remained steady, and overall seaborne crude flows sit above pledged cuts. Natural gas production also remains at risk with the frigid temps, however a swift shift warmer in the extended forecast is the dominating force to start the week with natural gas down over 30 cents. With the overall warm heating season and no major production outages, there is speculation that the top may have been put in last week. It's quiet on the macroeconomic front from a reporting perspective today, however, the US dollar is up over 800 points to provide headwinds.
Crude
- The Houthis reportedly attacked a US-owned commercial vessel in the Red Sea last night (BBG).
- Shell has suspended Red Sea shipments indefinitely amid fears of more Houthi attacks.
- All Russian crude heading to Asia continues to pass through the Red Sea (BBG).
- Russia’s seaborne crude shipments rose 166,000 bpd last week to 3.45 mbpd, which is under half of their proposed OPEC cut.
- TotalEnergies’ Port Arthur platform lost external power today, leading to a temporary shut down of their 238,000 bpd processing unit (Reuters).
- OPEC will release its monthly report tomorrow around 6:00 am CT.
- The API will report its inventory survey tomorrow due to the market holiday.
- As of 7:40 am CST: Brent crude oil up $0.79 to $79.00, US dollar index up $0.850 to 103.280 while the nearby e-mini S&P 500 futures contract is down 12.50 to 4804.00.
Diesel
- Refineries are running under stressful conditions amidst the extreme cold, increasing the risk for a short-term outage.
- Hedge funds have boosted net bullish Nymex diesel bets to the highest level in 5 weeks.
- Regional diesel basis remains heavily discounted when compared to 5-year ranges and in many places present an opportunity to fill storage and hedge by selling futures.
Gasoline
- Hedge funds have cut net bullish Nymex gasoline bets to the lowest in 4 weeks.
- Regional gasoline basis is also at depressed levels providing an opportunity for refilling storage.
Propane
- Conway is trading at .8025 while Belvieu is trading at .8125.
- Conway Swap Oct24-Mar25 strip trading ~.7700.
- This rally in propane is presenting an opportunity to sell back propane swaps covering this winter if you feel like you have excess length due to the overall slow heating season.
Natural Gas
- Overnight weather runs removed 24 HDDs from the two-week forecast.
- Freeze-offs will remain an upside risk in Texas through the middle of January while warm weather in the extended forecast continues to have priority.
- ERCOT has requested power conservation from 6 am to 9 am today in anticipation of a stressed power grid due to cold.
Continuous Daily HO:
