Outlook: Energies have found reason to stall momentum here today with many technical indicators providing resistance for several commodities. Overall, this week has adopted a more positive tone driven by improving economic sentiment, Chinese stimulus, escalation in geopolitical conflicts, and tightening fundamentals. It felt like a clean sweep across the board for the bulls but it's clear there is still work to be done for prices to enter a higher range. If energies can’t find legs today, they should certainly find fresh drivers next week with the Fed and OPEC+ meeting. Early indications are the JMMC will make no recommendations to OPEC for a policy change this time around but even rhetoric around the event can provide volatility. The same can be said with the Fed meeting in which its widely expected interest rates will remain unchanged. We will be keeping a close eye on the charts today, a failed attempt to conquer resistance could give way to profit-taking for those who bought the lows. We may be seeing that as a factor already this morning ahead of the weekend.
Crude
- Several OPEC+ delegates have stated the group is not planning to make any policy changes at their meeting next week. (BBG)
- Prompt continuous WTI futures are finding resistance at the 200-day moving average today.
- WTI is also finding resistance at its 50-week moving average after closing just 1 point shy of the mark yesterday.
- Baker Hughes will report its rig count at 12:00 pm CT.
- US Core PCE for December rose 2.9% vs 3% est and 3.2% last.
- As of 8:01 am CST: Brent crude oil down $0.51 to $81.92, US dollar index down $0.403 to 103.175 while the nearby e-mini S&P 500 futures contract is up 0.50 to 4924.00.
Diesel
- Europe’s ARA hub diesel stocks fell 8% over the last week.
- Europe may look to import more US diesel due to shipping delays in the Red Sea.
- Group 3 and Chicago diesel basis are still seeing heavy discounts relative to seasonal average levels, creating a favorable environment to fill storage and hedge by selling futures.
Gasoline
- Europe’s ARA hub gasoline stocks fell 4% over the last week.
- Valero announced yesterday that they expect heavy US refinery turnaround in Q1 2024. Product inventories would likely tighten if significant production goes offline.
Propane
- Conway is trading at .8375 while Belvieu is trading at .8825.
- Conway Swap Oct24-Mar25 strip trading ~.8100.
- Propane values remain supported by higher crude prices despite warmer weather moving through heating regions.
Natural Gas
- Overnight weather runs added 6 HDDs in the two-week forecast.
- The Biden Administration has halted reviews of applications to ship LNG from the US.
- The EIA reported a natural gas draw of 326 Bcf for last week.
- Natural gas inventories are now only 142 Bcf above 5-year average levels.
Continuous Weekly WTI: WTI futures are finding resistance at both the 200-day and 50-week moving averages today. A rejection could give way to a move back to the lower $70s, while a breakout could allow a return to the $80s.
