Outlook: The energy complex is finding some level of balancing as it weighs geopolitical risk and sluggish global demand. Chinese apparent oil demand rose by 8.6% in December, but signs of economic problems have discounted optimism from the purchases alone. Rumors that China ordered heavy debt ladened local governments to “halt” various infrastructure projects have raised concerns that the worst may be yet to come. Global crude in floating storage rose 3.2% last week with Asian stocks leading the increase. Supply outages from winter storm Gerri last week did add up but were viewed as short-term and inadequate to tip the supply and demand scale. Libya has also reportedly resumed production at its Sharara oil field which has helped offset some of the outages in the US. The economic slate is fairly light to start the week before S&P Global reports manufacturing data on Wednesday. Hawkish bets have risen over the last week and will be a key component to watch again this week.
Crude
- Winter storm Gerri shut 1.5 mbpd of crude capacity and 1.8 million bpd of refinery capacity last week. (BBG)
- North Dakota’s oil output could take a month to fully recover and is down ~250,000 bpd as of this morning per pipeline authority.
- Crude loadings at Russia’s Baltic port of Ust-Luga were halted after a drone strike over the weekend. Flows quickly resumed Monday morning. (BBG)
- Russia’s crude processing fell to 5.5 mbpd last week, down 38,000 bpd from December volumes. (BBG)
- Russia overtook Saudi Arabia as China's largest source of oil imports last year. China imported 107 million tons of crude from Russia vs 86 million tons from Saudi Arabia. (BBG)
- The WTI prompt spread closed at its highest level since November on Friday.
- Today is LTD for February WTI.
- Baker Hughes reported US oil rigs fell by 2 last week to 497.
- As of 8:12 am CST: Brent crude oil up $0.45 to $79.01, US dollar index down $0.065 to 103.220 while the nearby e-mini S&P 500 futures contract is up 14.50 to 4883.00.
Diesel
- Refinery maintenance season could grow larger than expected this spring following disruptions and damage from winter storm Gerri.
- Managed money participants decreased Nymex HO length by 3k lots last week.
Gasoline
- Managed money participants decreased Nymex RBOB length by 2.9k lots last week.
Propane
- Conway is trading at .8950 while Belvieu is trading at .8000.
- Conway Swap Oct24-Mar25 strip trading ~.7800.
- 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 20 HDDs in the two-week forecast.
- Baker Hughes reported nat gas rigs rose by 3 to 120 last week.
- Henry Hub prices are down nearly a dollar from its January high.
- Dutch TTF prices are trading at a six-month low and down over 15% YTD.
Continuous Daily NG: Prompt natural gas gapped lower to start the week following bearish weekend weather revisions.
