Outlook: The energy complex is finding marginal gains this morning as it looks to hold the positive trend halfway through the week. Markets may be finding support from failed ceasefire agreements, another round of missiles fired at commercial vessels in the Red Sea, or outside markets, among others. The S&P will look to break 5000 this week after falling just shy of the mark last week. The broader equity markets have remained unphased by the recent hawkish shift and recessionary fears remain subdued for the time being. Positive fundamental news out of India may also be supportive today as it offsets the negative sentiment out of China over the last week. India is expected to take over as the primary growth driver through the next decade and will likely continue to grab more of the spotlight. The API survey yesterday did show a larger than expected draw in diesel stocks and this will be a number to follow when the EIA reports their data at 9:30. Diesel stocks remain below 5-year average levels despite the global slowdown in manufacturing sectors.
Crude
- India’s oil-product consumption in January rose 8.3% y/y and to its highest level in 8 months. (BBG)
- The IEA projects India will be the leading driver of global oil consumption growth through 2030. (BBG)
- The EIA released its STEO report yesterday which lowered US crude production for 2024 while also lowering demand. The bulk of growth was pushed back to 2025.
- The EIA forecasts US crude production will remain steady to slightly lower in 2024 from the end of 2023, which is a revision lower from its previous forecast calling for marginal growth.
- Reuters estimates crude stocks rose 1.9 million barrels last week.
- The API survey showed crude stocks rose by 700,000 barrels last week.
- The EIA will report inventories at 9:30 am CT.
- As of 8:23 am CST: Brent crude oil up $0.51 to $79.11, US dollar index down $0.190 to 104.023 while the nearby e-mini S&P 500 futures contract is up 21.25 to 4996.00.
Diesel
- The Nymex diesel crack closed at its strongest level since Nov 20th yesterday.
- Group 3 diesel basis rose yesterday but still remains discounted around -38c.
- Chicago diesel basis has seen the biggest jump this week as it encompasses the Whiting refinery.
- Reuters estimates diesel stocks fell 1.0 million barrels last week.
- The API survey showed diesel stocks fell by 3.7 million barrels last week.
Gasoline
- Reuters estimates gasoline stocks rose 100,000 barrels last week.
- The API survey showed gasoline stocks rose 3.7 million barrels last week.
Propane
- Conway is trading at .8650 while Belvieu is trading at .9250.
- Conway Swap Oct24-Mar25 strip trading ~.8100.
- Conway propane is trading at 50% value to WTI.
- OPIS estimates crude stocks fell 2.75 million barrels last week.
Natural Gas
- Overnight weather runs removed 2 HDDs in the two-week forecast.
- Temperature forecasts are expected to drop below the 10-year average in late February.
- The EIA’s STEO report showed a decrease in 2024 dry nat gas production by ~1 Bcf/d to 104.4 Bcf/d while increasing its demand by 0.75 Bcf/d to 90.64 Bcf/d.
- Reuters estimates nat gas stocks fell between 66-77 Bcf last week.
Crude Oil Open Interest: Crude is slightly higher than where it was at the start of the year, but the tighter trade range has increased trading interest. Aggregate open interest across the main futures contracts has risen to its highest level since March. (BBG)
