Outlook: Energies are feeling the pressure today from more hawkish interest rate bets and supply outage recoveries. Libya’s oil production has returned to 1.2 mbpd with the restart of its largest refinery and the US is emerging out of the implications of freeze-offs last week. Reuters' early poll suggests draws for crude and diesel last week which could help limit downside if confirmed by the EIA on Wednesday. Fed fund futures continue to slide with rate cut bets down to just 42% with the majority now expecting no cut at the March meeting. Higher for longer interest rates will make it challenging for demand growth and likely limit upside risk unless a significant supply outage develops. The Fed will meet again in 8 days and may provide more clarity on their intentions for March.
Crude
- Libya’s 300,000 bpd Sharara oilfield has resumed production following protests earlier this month. (Reuters)
- North Dakota’s oil production remains down 20% following freeze-offs last week according to pipeline authority. (BBG)
- 15% of US crude processing remains offline due to freeze-offs last week. (BBG)
- Russia’s seaborne crude shipments fell to their lowest level in two months last week at 3.36 mbpd.
- The CME FedWatch tool shows a 42.4% chance of a 25 bp rate cut in March, down from 63% a week ago.
- March WTI is finding resistance at its 200-day moving average this week near $75.41.
- Reuters estimates crude stocks fell by 3.0 million barrels last week.
- The API will report its inventory survey today at 3:30 pm CT.
- As of 8:12 am CST: Brent crude oil down $1.29 to $78.77, US dollar index up $0.063 to 103.394 while the nearby e-mini S&P 500 futures contract is up 5.50 to 4886.00.
Diesel
- Reuters estimates diesel stocks fell by 1.2 million barrels last week.
- Prompt diesel futures are testing resistance it its 50-day moving average this week.
- The prompt diesel spread has fallen back below 3 cents for those looking to roll short hedges.
Gasoline
- Reuters estimates gasoline stocks rose by 2.2 million barrels last week.
- Premiums to ship gasoline from Europe to New York have climbed to the highest since April due to avoidance of the Red Sea.
- Despite higher costs, gasoline imports from Europe are on track to hit 144,000 bpd, highest since January 2019. (BBG)
- The Nymex gasoline crack closed at its highest level since September yesterday.
Propane
- Conway is trading at .8850 while Belvieu is trading at .7950.
- Conway Swap Oct24-Mar25 strip trading ~.7900.
- Conway’s value to crude fell to 45% yesterday.
Natural Gas
- Overnight weather runs removed 4 HDDs in the two-week forecast.
- LNG exports through the Suez fell to zero last week. (BBG)
- Reuters estimates nat gas stocks fell between 324-311 Bcf
Continuous Daily WTI: Nearby WTI traded above its upper Bollinger Band intraday yesterday as it flirts with overbought territory. Bands have tightened considerably with crude becoming rangebound over the last two months.
