Outlook: Energies look relatively idle to start the week with the exception of diesel which is finding a more convincing weakness. Given the rally last week, profit-taking would be the likely culprit for the downside pressure today. The Houthis did target another cargo ship as recently as this morning, but no major events of escalation were noted over the weekend. Iran is providing bearish commentary this morning stating developments in Gaza are moving in a positive direction. The market seems unlikely to run with these comments after the false report of a ceasefire just two weeks ago. Trade may remain quiet today with an OPEC monthly report due out tomorrow along with US January CPI. This week’s EIA report may also grab more attention as its expected to show the effects of the Whiting refinery outage. Another week of significant product stock draws would help the market position for another positive week.
Crude
- Iran’s foreign minister stated that “Developments in Gaza are moving toward a diplomatic solution” earlier today.
- Iraq’s oil output is said to now be in line with OPEC’s quota following their voluntary 220,000 bpd cut starting this quarter. Production dropped from 4.2 mbpd to 4 mbpd according to Minister Hayyan Abdul Ghani.
- Saudi Aramco’s CEO Amin Nasser expects global oil demand to grow 1.5 mbpd to 104 mbpd this year.
- Baker Hughes reported US oil rigs remained unchanged for the second consecutive week at 499.
- Last week’s COT report showed crude oil managed money decreased net length by 84.5k lots. WTI outright longs were cut to the lowest level since 2010.
- OPEC will release its monthly report tomorrow morning.
- US January CPI will be reported tomorrow at 7:30 am CT.
- As of 8:21 am CST: Brent crude oil down $0.36 to $76.48, US dollar index up $0.063 to 104.171 while the nearby e-mini S&P 500 futures contract is down 3.25 to 5041.00.
Diesel
- Last week’s COT report showed heating oil net length fell by 6.9k lots.
- The ICE gasoil crack has risen to its highest level since 2012, reflecting a tightening diesel market in Europe.
Gasoline
- Last week’s COT report showed managed money decreased gasoline net length by 11.5k lots.
Propane
- Conway is trading at .8700 while Belvieu is trading at .9075.
- Conway Swap Oct24-Mar25 strip trading ~.8100.
- Conway propane is trading at 48% value to WTI.
Natural Gas
- Overnight weather runs removed 3 HDDs in the two-week forecast.
- The two-week forecast is expected to be ~28 HDDS below 10-year average levels.
- Baker Hughes reported nat gas rigs rose by 4 to 121 last week.
Continuous Daily HO: Profit-taking may be providing downside pressure to start the week after no major geopolitical escalation over the weekend and markets tipping overbought.
