Outlook: Energies are mixed this morning after another sharp move lower yesterday. Yesterday’s EIA report deflated some of the optimism for demand growth here in the US with both gasoline and diesel demand falling week-over-week. The IEA reinforced demand loss on a global scale this morning showing a decline of 830,000 bpd in crude demand last quarter. The Paris-based group also revised non-OPEC+ production higher for this year while keeping their demand forecast unchanged. While Iraq and Kazakhstan have noted overproduction in January, the IEA saw the UAE as the worst OPEC quota overproducer in January. The market will continue to cautiously monitor global supply and demand to help determine the longer-term trend for energies.
Crude
- The IEA released their monthly report this morning which showed an 830,000 bpd Q/Q decrease in global crude demand.
- The IEA kept their 2024 world crude demand forecast unchanged at 103 mbpd.
- The IEA revised its non-OPEC supply forecast higher from 70.4 mbpd to 70.6 mbpd, driven by the US, Brazil, Guyana, and Canada.
- The IEA estimates OPEC+ produced 550,000 bpd above its quota for January.
- Iraq and Kazakhstan both overproduced relative to their OPEC+ quotas in January but have said they intend to compensate moving forward to make up for it. (BBG)
- Russia’s crude exports are expected to grow short term due to outages at refineries from Ukrainian attacks. (BBG)
- The EIA reported crude stocks rose by 12 million barrels last week.
- Refinery utilization fell 1.8% to 80.6% and is 5.1% below 5-year average levels.
- As of 8:36 am CST: Brent crude oil up $0.17 to $81.76, US dollar index down $0.362 to 104.361 while the nearby e-mini S&P 500 futures contract is up 6.25 to 5024.00.
Diesel
- The EIA reported diesel stocks fell 1.9 million barrels last week vs 1.6 mb est.
- US diesel demand fell 7.9% last week to 3.5 mbpd.
- 4-week average diesel demand fell to its lowest level since 2016 last week.
Gasoline
- The EIA reported gasoline stocks fell 3.7 million barrels last week vs 1.2 mb est.
- US gasoline demand fell 7.3% to 8.1 mbpd last week.
- BP’s Whiting refinery remains shut and expectations are the outage could last weeks.
Propane
- Conway is trading at .8775 while Belvieu is trading at .9250.
- Conway Swap Oct24-Mar25 strip trading ~.8300.
- Conway propane is trading at 48% value to WTI.
- The EIA reported a larger than expected draw of 3.6 million barrels for propane last week.
- The exported 74% of propane production last week.
Natural Gas
- Overnight weather runs removed 4.5 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 HO: Nearby diesel futures are testing support at the 200-day moving average today. A close below could result in bearish sentiment.
