Morning Highlights
Morning Highlights

2-16-24 Energies mixed pushing refining margins lower...

Riley Schwieger

Feb 16, 2024

Outlook: The energy complex is again mixed this morning with crude higher and products lower. The US dollar is finding strength again today following a hawkish US PPI report. Both headline and core PPI saw a higher-than-expected print, bringing a halt to the trend of disinflation in core parts of input prices for US companies. Nymex crack spreads are continuing their freefall today, possibly reflecting anticipation for a rebound in refinery runs in the near future. Strength in crude and an expansion into deeper backwardation is another driving force. With Brent’s value to WTI trading around $5.25, the appetite for US crude should remain strong to support exports and pressure stocks. Natural gas is clinging to a marginal gain this morning but remains on track for another steep weekly loss. Those looking for natural gas coverage this fall should consider layering in contracts at these levels with deferred contracts showing more resilience to the downside than the prompt.            


  • Russia produced around 9.46 mbpd of crude in January, falling just 10,000 bpd short of its pledged cut for this quarter. (BBG)
  • Yesterday, the US DOE purchased 2.95 million barrels of oil for the SPR at an average purchase price of $77.81.
  • Since 2023, the US has purchased 23.08 million barrels at an average price of $76.34 in its effort to refill the emergency reserve.
  • Prompt crude spreads are moving sharply higher today with WTI’s backwardation pushing to 3.5-month highs.
  • Markets moving deeper into backwardation should provide comfort to the bulls.
  • US January PPI rose 0.9% vs 0.6% est. and 1% last.
  • Michigan Consumer Sentiment will be reported at 9:00 am CT.
  • Baker Hughes will report its rig count at 12:00 pm CT.
  • As of 8:12 am CST: Brent crude oil up $0.23 to $83.09, US dollar index up $0.195 to 104.491 while the nearby e-mini S&P 500 futures contract is down 3.25 to 5043.00.


  • TSA total traveler throughput has risen 10.8% above 2019 levels on a 7-day average.
  • Gasoil stocks at Europe’s ARA hub rose 3% over the last week.
  • Singapore middle distillate stocks rose to a 3-month high over the last week.


  • Gasoline stocks at Europe’s ARA hub rose 16% over the last week.
  • The prompt RBOB crack has fallen nearly five dollars in the past 3 sessions.
  • BP’s Whiting refinery remains shut and expectations are the outage could last weeks.


  • Conway is trading at .8725 while Belvieu is trading at .9400.
  • 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 1 HDDs in the two-week forecast.
  • The EIA reported natural gas stocks fell 49 Bcf last week.
  • Total gas inventories are 255 Bcf above last year and 348 Bcf above 5-year average levels.
  • Yesterday, the US House of Representatives voted to pass legislation that would undo the Biden administration’s freeze on new LNG export approvals.

Continuous prompt WTI spread: The nearby time spread for crude has worked to its highest levels since October. A backwardated market can signal tightening supply environment with demand focused in the prompt.