Outlook: The energy complex found strength early but has been met with a headwind gust following a higher-than-expected inflation report today. Equities saw a burst of selling following the report which showed both core and headline CPI running hot. S&P futures are down over 1% and trading back below 5000 this morning. Rate cut bets had already been being pushed back from March to May and sticky inflation will reinforce the idea that interest rates may need to stay higher for longer. The CME FedWatch tool still suggests a 52% chance of a rate cut in May while 40% of bets call for no change. Most notably there was a 10% jump in bets for no interest rate cuts by June following the hawkish data this morning. Energies are slipping into the red as the dust settles here this morning as high interest rates will act to suppress energy demand.
Crude
- OPEC left its 2024 and 2025 global oil demand forecast unchanged in its monthly report released today.
- OPEC’s report reflected uneven delivery of new oil production cuts to start the year while showing production off 350,000 bpd.
- Russia’s crude output was reported at 9.5 mbpd in December and in line with its output cut pledge per the OPEC report.
- Russia’s oil exports through Feb 11 were 200,000 bpd above its pledged export cut despite the compliance on the production side. (BBG)
- Nearly half of the 50 tankers carrying Russian oil that the US sanctioned on Oct. 10th have not loaded oil since being listed. (BBG)
- The continuous daily WTI contract is testing resistance at its 200-day moving average of $77.40 today.
- US January CPI was reported at 3.1% vs 2.9% est. and 3.4% prev.
- Reuters estimates crude stocks rose by 2.6 million barrels last week.
- The API will report its inventory survey at 3:30 CT.
- As of 7:45 am CST: Brent crude oil up $0.60 to $82.60, US dollar index up $0.483 to 104.653 while the nearby e-mini S&P 500 futures contract is down 58.25 to 4982.00.
Diesel
- Reuters estimates diesel stocks fell by 1.6 million barrels last week.
- European diesel stocks are beginning to reflect a tighter environment due to Red Sea delays.
Gasoline
- Reuters estimates gasoline stocks fell by 1.0 million barrels last week.
- Nymex gasoline futures are trading near 4-month highs today.
Propane
- Conway is trading at .8850 while Belvieu is trading at .9250.
- Conway Swap Oct24-Mar25 strip trading ~.8100.
- Conway propane is trading at 48% value to WTI.
Natural Gas
- Overnight weather runs removed 5 HDDs in the two-week forecast.
- The two-week forecast is expected to be ~28 HDDS below 10-year average levels.
- Reuters estimates nat gas stocks fell between 53 and 76 Bcf last week.
- Yesterday, Platts reported the US DOE will consider requests to extend existing LNG export licenses during the Biden administration’s pause on permits for new projects.
Continuous Daily WTI: WTI is challenging resistance at its 200-day moving average today. A close above may be a bullish indication and open the door to a test of $80.
