Outlook: The energy complex is trending higher for the fourth consecutive day as the bulls hold control. Nearby WTI futures are testing resistance at $75.00 today while nearby HO futures are testing resistance at the 100-day moving average of $2.8577. Given the rejection of ceasefire deals, the risk premium is likely working its way back into the marketplace to help support the trend this week. Weekly draws for gas and diesel stocks last week have helped crack spreads find strength to follow suit. The prompt RBOB crack is at its highest level since September while the diesel crack is at its highest level since November. Refinery outages and the anticipation of a large spring maintenance season should continue to put upward pressure on these spreads. Looking further ahead, articles talking about hurricane risk this summer are already starting to surface due to increasing odds of a La Nina weather pattern. Please reach out if you have questions on how to hedge this risk.
Crude
- Israel rejected a Hamas proposal for a ceasefire yesterday.
- JPMorgan says oil will climb by $10 by May even if OPEC+ eases a portion of their cuts.
- Chinese CPI data overnight showed the slowest annualized rate since 2009.
- The EIA reported crude stocks rose 5.5 million barrels last week.
- US crude production has fully recovered from weather related outages with an increase of 300,000 bpd to 13.3 mbpd last week.
- Crude stocks could face another large build next week due to the outage at the Whiting refinery.
- S&P futures closed above $5,000 for the first time ever yesterday.
- As of 8:23 am CST: Brent crude oil up $1.04 to $80.25, US dollar index up $0.313 to 104.370 while the nearby e-mini S&P 500 futures contract is down 4.25 to 5011.00.
Diesel
- The EIA reported diesel stocks fell by 3.2 million barrels last week.
- 4-week average diesel demand in the US sits 400,000 bpd below 5-year average levels.
- March diesel has taken out its recent high on January 29th of $2.8557 today. $2.9613 is the next peak for the March contract set back in October.
Gasoline
- The EIA reported gasoline stocks fell by 3.1 million barrels last week.
- 4-week average gasoline demand in the US sits 200,000 bpd below 5-year average levels.
- Chinese road congestion fell 24.6% in the week to February 7th. (BBG)
Propane
- Conway is trading at .8625 while Belvieu is trading at .9175.
- Conway Swap Oct24-Mar25 strip trading ~.8100.
- Conway propane is trading at 50% value to WTI.
- The EIA reported a smaller than expected draw of 2 million barrels for propane yesterday.
- Propane exports remained strong a 1.69 mbpd last week.
Natural Gas
- Overnight weather runs removed 4 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.
4-week avg US diesel demand: Diesel demand continues to trend beneath previous 5-year lows.
