Outlook: Barring a collapse today, energies are on track to secure weekly gains. The bulls have clearly regained control this week with a full recovery of last week’s losses. Gas and diesel have surpassed their late January high this week supported by a drawdown in stocks and BP’s Whiting refinery remaining offline. Crack spreads have also found support in fear of a tightening environment. Geopolitical risk has roared back this week with ceasefire deals falling apart, missiles flying in the Red Sea, and Ukraine striking Russian oil infrastructure. Macroeconomic sentiment has been relatively positive this week despite rate-cut bets being pushed further back. US CPI will be reported on Tuesday next week where expectations are for inflation to decline on an annualized basis. The Fed is looking for more confidence that inflation is under control before unwinding rates and a lower print for January would be a good start to 2024.
Crude
- Ukraine launched drone attacks against two oil refineries in southern Russia on Friday.
- The US Treasury Department sanctioned another three entities for violating the Russian oil price cap yesterday.
- The US announced plans to purchase another 3 million barrels for the SPR for July delivery yesterday.
- The US SPR currently holds roughly 360 million barrels of crude which would cover more than four months of net imports.
- Baker Hughes will report rig counts at 12:00 pm CT.
- China begins its week-long Lunar New Year holiday today.
- As of 8:10 am CST: Brent crude oil up $0.04 to $81.67, US dollar index down $0.058 to 104.107 while the nearby e-mini S&P 500 futures contract is up 11.25 to 5029.00.
Diesel
- Gasoil stocks at Europe’s ARA hub fell 3.6% w/w.
- Moore Research suggests a seasonal buy of Apr HO on Feb 9th with an exit date of Feb 23rd. Please reach out for more information on this trade.
- The continuous daily HO contract closed above its 100-day moving average yesterday
Gasoline
- Gasoline stocks at Europe’s ARA hub rose 13% w/w.
- AAA reports the national average gas price at $3.16, up 9 cents from a month ago.
Propane
- Conway is trading at .8700 while Belvieu is trading at .9075.
- 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 last week.
- Propane exports remained strong a 1.69 mbpd last week.
Natural Gas
- Overnight weather runs removed 16 HDDs in the two-week forecast.
- Near-record production and an outage at Freeport have helped the bears push NG futures to 3.5-year lows.
- The EIA reported natural gas stocks fell 75 Bcf last week, which fell within the range of estimates.
Continuous Weekly NG: Natural gas futures have fallen to 3.5-year lows.
