Outlook: It was a volatile weekend with a Russian fuel tanker being hit by a Houthi missile and a drone strike that struck a US base in Jordan, killing 3. The US is facing growing pressure to challenge Iran but Iran itself states they share no responsibility for the event. Tensions remain high and physical barrels are slowly but surely being impacted and weighing on the market. From a technical standpoint, energies have begun to tip overbought which may be the reason for the pause today despite the number of geopolitical events. The market should find fresh drivers this week with a slew of economic reports and a Fed rate decision on Wednesday. The macros have been supportive as of late with inflation falling and health indicators remaining stout. It’s a delicate balance and rate cut bets have slid from March to May, but recessionary concerns remain at bay.
Crude
- Three US soldiers were killed over the weekend during an attack on a US base in Jordan.
- Houthi militants struck a tanker carrying Russian fuel through the Gulf of Aden on Friday.
- Venezuelan President Nicolas Maduro has banned opposition for running for office, which was key criteria in the lifting of sanctions.
- Global crude in floating storage fell by 18% last week according to Vortexa data.
- Hong Kong court has ordered the liquidation of property giant China Evergrande Group, raising concerns of China’s overall economic health.
- Russia’s Tuapse refinery will halt production for a month due to damage from a drone strike last week. The refinery processing 180,000 bpd of crude.
- Baker Hughes reported US oil rig counts rose by 2 to 499 last week.
- WTI managed money increased net length by 34k lots last week.
- As of 8:16 am CST: Brent crude oil down $0.49 to $83.06, US dollar index up $0.203 to 103.636 while the nearby e-mini S&P 500 futures contract is down 0.50 to 4915.00.
Diesel
- The Tuapse refinery in Russia is a key diesel producing refinery and will be shut down for around a month.
- Prompt HO futures tested resistance at the 100-day moving average last night before reversing lower this morning.
- Nymex HO managed money decreased net length by 5.9k lots last week.
Gasoline
- Similar to diesel, daily stochastics have risen into overbought territory which may support today’s weakness.
- Nymex RBOB managed money increased net length by 7.7k lots last week.
Propane
- Conway is trading at .8325 while Belvieu is trading at .8725.
- 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 3 HDDs in the two-week forecast.
- Freeport LNG will shut down one of three liquefaction trains for a month due to technical issues caused by winter storm Gerri.
- Baker Hughes reported nat gas rigs fell by 1 to 119.
Continuous Daily WTI: The 100-day moving average will be the next upside target for nearby diesel.
