Outlook: A technical breakdown that provoked selling yesterday is finding enough fundamental support today to keep the pressure on. Saudi Arabia is reducing production capacity expansion plans by 1 mbpd in an effort to save CAPEX money. While less production capacity could be viewed as bullish, it raises the question as to why they would limit growth unless they don’t believe the demand is there to support it. Russia is also supporting the bearish narrative today with the easing of weather-related export restrictions to allow for an uptick in oil flows. Upside risks still loom with tensions high between the US and Iran. Iran’s oil exports account for a little over 1% of global oil demand and if they become directly involved with the US, oil-related sanctions seem likely. Outside markets will look to the JOLTS jobs report later this morning for fresh influence. The labor market has remained resilient under high-interest rates thus far and has helped tame recessionary fears.
Crude
- The US intends to reinstate oil sanctions on Venezuela unless all opposition is allowed to run in this year’s election.
- The Trans Mountain pipeline has encountered another delay due to technical issues. The 890,000 bpd pipeline was previously expected to be operable in Q1.
- The US has said it will take all necessary actions to defend its troops following the drone attack in Jordan by Iran-backed militants.
- Saudi Aramco has lowered its maximum sustainable oil capacity to 12 mbpd, down from 13 mbpd previous. The move raises questions on long term demand views. (Reuters)
- Russia has eased weather related export restrictions to increase oil flows. (Reuters)
- The IMF raised its 2024 global GDP growth outlook to 3.1% from 2.9%.
- Reuters estimates crude stocks fell 900,000 barrels last week.
- The API will report its inventory survey today at 3:30 am CT.
- As of 8:08 am CST: Brent crude oil down $0.83 to $81.57, US dollar index down $0.097 to 103.512 while the nearby e-mini S&P 500 futures contract is down 11.25 to 4943.00.
Diesel
- India’s diesel exports to Europe as expected to hit a two-year low in January due to the Red Sea conflict. Volumes have declined 80% m/m to ~45,000 bpd. (Reuters)
- Prompt diesel futures may look to find support at the 200-day moving average today near $2.7710.
- Reuters estimates diesel stocks fell by 500,000 barrels last week.
Gasoline
- Prompt RBOB futures are trading below the 9-day moving average today. A close below this level could leave the 50-day moving average as a support target near $2.1450.
- Reuters estimates gasoline stocks rose 1.7 million barrels last week.
Propane
- Conway is trading at .8275 while Belvieu is trading at .8800.
- Conway Swap Oct24-Mar25 strip trading ~.8000.
- Propane values remain supported by higher crude prices despite warmer weather moving through heating regions.
Natural Gas
- Overnight weather runs removed 18 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.
- The NWS is projecting Texas will see below average temperatures from Feb 3rd to Feb 11th, bringing back more risk for freeze-offs.
Continuous Daily HO:
