Outlook: The softer tone in energies looks to continue today with crude and products all marginally lower to start. Bullish drivers have certainly developed this week but none compelling enough to allow markets to break through this next level of resistance. Without fundamental tailwinds, these risk premium events have seen momentum extinguish quicker than events in past years. This certainly may be due to the economic environment which is positioned to suppress demand. Additionally, countries like China who are expected to drive growth have continuously stumbled as they attempt to recover from Covid lockdowns. A fourth consecutive month of contraction for China’s manufacturing sector reported overnight could be responsible for some of the pressure today. Still, markets look indecisive climbing from the lows and may look for fresh direction following the EIA stats later this morning.
Crude
- Yesterday, the US indicated they do not intend to renew the license provided sanction relief to Venezuela when it expires on April 18th.
- China’s manufacturing sector contracted for a fourth consecutive month in January, according to its official factory survey.
- The FOMC statement will be held at 1:00 pm CT today with expectations for no change in interest rates.
- Reuters estimates crude stocks fell 200,000 barrels last week.
- The API survey showed crude stocks fell 2.5 million barrels last week.
- The EIA will report inventories at 9:30 am CT
- As of 7:55 am CST: Brent crude oil down $0.71 to $82.16, US dollar index down $0.071 to 103.322 while the nearby e-mini S&P 500 futures contract is down 24.25 to 4925.00.
Diesel
- The API survey showed diesel stocks fell by 2.1 million barrels last week.
- Reuters estimates diesel stocks fell by 400,000 barrels last week.
- Spot diesel basis throughout the country remains sharply discounted, favorable for filling storage and hedging for future delivery.
Gasoline
- The API survey showed gasoline stocks rose 600,000 barrels last week.
- Reuters estimates gasoline stocks rose 1.5 million barrels last week.
- Estimates for a larger build in gas stocks again could indicate another week of soft gasoline demand.
Propane
- Conway is trading at .8475 while Belvieu is trading at .9025.
- Conway Swap Oct24-Mar25 strip trading ~.8000.
- OPIS estimates propane stocks fell by 3 million barrels last week.
Natural Gas
- Overnight weather runs removed 11 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, bring back more risk for freeze-offs.
Continuous Daily NG: A large gap lower for natural gas as March replaced February for the prompt spot. Markets like to fill gaps and this will be an upside target if freeze-offs resurface in Texas next week.
