Outlook: Energies have begun to lose steam already after holding marginal gains overnight into early morning. A reversal in Chinese equity markets may have provided a brief boost, however, the overall trend remains concerning. A significant downturn in China’s economy would provide stiff headwinds for global oil demand and its likely we are already seeing evidence of this. Given the amount of geopolitical risk in the market and a lack of overall response, demand growth concerns could be greater than publicized. Additional headwinds this week are being provided by a resurgence in Russian oil exports. After a spout of weather-related shut-ins this year, an 880,000 bpd increase in weekly flows has pushed exports back to their highest level this year. We’ll look for fresh influence from the EIA’s STEO report midday and the API report this afternoon.
Crude
- Russia’s weekly seaborne crude flows rose 880,000 bpd to the highest level this year following weather-related outages in the previous two reports. (BBG)
- Another cargo ship has been seriously damaged due to a Houthi attack overnight. (Reuters)
- The US struck 2 Houthi sea drones in Yemen as the conflict remains steady. (Reuters)
- The ceasefire offer delivered to Hamas last week was not accepted and requested more guarantees.
- Chinese equities saw a reversal into positive territory last night but remain in a substantial downturn.
- The EIA will release its STEO report today around midday.
- Reuters estimates crude stocks rose 2.1 million barrels last week.
- The API will report its inventory survey at 3:30 pm CT today.
- As of 8:12 am CST: Brent crude oil up $0.47 to $78.46, US dollar index up $0.010 to 104.465 while the nearby e-mini S&P 500 futures contract is up 8.25 to 4970.00.
Diesel
- Reuters estimates diesel stocks fell 1.2 million barrels last week.
- BP's Whiting, Indiana refinery remains shut down with no timetable for resumption of service.
Gasoline
- Reuters estimates gasoline stocks rose 500,000 barrels last week.
- GasBuddy data suggests gasoline demand rebounded last week.
Propane
- Conway is trading at .8600 while Belvieu is trading at .9450.
- Conway Swap Oct24-Mar25 strip trading ~.8100.
- Conway propane is trading at 50% value to WTI.
Natural Gas
- Overnight weather runs removed 1 HDDs in the two-week forecast.
- Temperature forecasts are expected to drop below the 10-year average in late February.
- Reuters estimates nat gas stocks fell between 66-77 Bcf last week.
Red Sea Disruption: The number of ships avoiding the Red Sea continues to grow as attacks remain steady.
