Outlook: Energies are looking for direction this morning with crude higher and products lower. The API survey yesterday showed larger moves in inventories than what the Reuters poll suggests. If the EIA confirmed the API’s projection of an 8.5 million barrel build for crude, it would be the largest weekly increase since November. Products are also expected to see significant declines and if we do see a volatile report, it may be due to the refinery outage in Whiting Indiana. GasBuddy data suggests gasoline demand fell last week but the stock draw would indicate the decline in refinery utilization would be overpowering. We’ll look to the EIA report later this morning to confirm the numbers and give the market a firmer footing.
Crude
- Kazakhstan said it will compensate for its oil overproduction in January over the next four months. Oil production totaled ~1.9 mbpd in January while its output quota sits at 1.45 mbpd.
- The WTI curve continues to work deeper into backwardation with the prompt spread nearing 40 cents.
- Continuous daily WTI closed above its 200-day moving average yesterday.
- WTI March options are set to expire 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 report showed crude stocks rose 8.5 million barrels last week.
- The EIA will report inventories at 9:30 am CT.
- As of 8:14 am CST: Brent crude oil up $0.61 to $83.38, US dollar index down $0.071 to 104.889 while the nearby e-mini S&P 500 futures contract is up 23.25 to 4994.00.
Diesel
- Reuters estimates diesel stocks fell by 1.6 million barrels last week.
- The API report showed diesel stocks fell 4 million barrels last week.
Gasoline
- Reuters estimates gasoline stocks fell by 1.2 million barrels last week.
- The API report showed gasoline stocks fell 7.2 million barrels last week.
- The prompt Nymex gasoline crack rose to its highest level since September yesterday.
Propane
- Conway is trading at .8850 while Belvieu is trading at .9250.
- Conway Swap Oct24-Mar25 strip trading ~.8300.
- Conway propane is trading at 48% value to WTI.
- OPIS estimates propane stocks fell by 2.4 million barrels last week.
Natural Gas
- Overnight weather runs removed 8 HDDs in the two-week forecast.
- Reuters estimates nat gas stocks fell between 53 and 76 Bcf last week.
- Natural gas futures have declined over 20% since the start of January.
Continuous Daily WTI: WTI closed above its 200-day moving average yesterday which can be considered a bullish development.
