Outlook: A positive shift in broader economic sentiment is helping energies find momentum this week. WTI is trading at its highest level in nearly two months as it looks to hold its ground above $75. Crude, gas, and diesel are all nearing key resistance levels on their respective continuous daily charts and will be levels to keep an eye on. A prolonged conflict in the Red Sea may also be setting in with fewer and fewer shippers willing to traverse the risky trade route. The EU has dodged a bullet two years in a row with warm winters allowing for LNG stocks to remain healthy since banning Russian supply. Qatar has announced delays in supplying Europe with LNG due to having to divert flows but TTF prices have continued lower. In the US, propane and natural gas have found a boost from weather-related outages and higher demand. Propane remains heavily correlated with moves in crude and may keep it propped up despite a warm forecast.
Crude
- A drone strike hit Russia’s Rosneft PJSC Tuapse refinery on the Black Sea coast today.
- Chinese equities have seen a positive response to the fresh round of stimulus which may be supportive for energy demand.
- China’s onshore inventories have fallen to an 8-month low according to Vortexa data.
- The EIA reported crude stocks fell 9.2 million barrels last week.
- The EIA estimates US crude production fell 1 mbpd last week due to winter storm Gerri.
- Total products supplied over the last four weeks averaged 19.5 mbpd, up 3.3% from year ago levels.
- The ECB left interest rates unchanged today at 4.5%
- US GDP rose 3.3% in Q4 vs 2% est. and 4.9% last.
- Q4 PCE, which is an inflationary indicator, remained flat at 2% Q/Q.
- As of 8:07 am CST: Brent crude oil up $0.85 to $80.92, US dollar index up $0.071 to 103.307 while the nearby e-mini S&P 500 futures contract is up 17.50 to 4915.00.
Diesel
- The EIA reported diesel stocks fell by 1.4 mbpd last week vs +300,000 est.
- US diesel over the last four weeks averaged 3.4 mbpd and is 6.9% below year-ago levels.
Gasoline
- The EIA reported gasoline stocks rose 4.9 million barrels last week vs +2.2 mb est.
- US gasoline demand over the last four weeks averaged 8.1 mbpd and is up 3.7% from year ago levels.
Propane
- Conway is trading at .8050 while Belvieu is trading at .8625.
- Conway Swap Oct24-Mar25 strip trading ~.7900.
- The EIA reported a larger than expected draw of 8.4 million barrels last week.
- Production recovery is expected this week but higher crude prices should continue to support nearby propane values.
Natural Gas
- Overnight weather runs added 20 HDDs in the two-week forecast.
- Qatar is delaying LNG shipments to Europe due to Red Sea risks.
- Reuters estimates nat gas stocks fell between 324-311 Bcf. A realization of this draw would be double that of the 5-year average withdrawal for this time of year.
India Oil Demand: Demand for refined oil products in India is expected to grow 3% in 2024-2025, which would be the slowest growth in four years. The country remains the fastest-growing large economy and the deceleration has been expected.
