Outlook: The energy complex is on pace for mixed weekly results but overall the group is finding support today. Crude will likely garner the most attention today as it flirts with an eighty-dollar handle for the first time in 5 months. A Reuters report suggesting OPEC will announce an extension of its production cuts next week may be providing a tailwind into the weekend. Refined products continue to draft support from ongoing refinery outages and maintenance. Diesel, however, has been the weak leg this week and is on pace to for ~2 cent weekly decline. RBOB futures have been their seasonal jump in the prompt contract due to the RVP transition. The EIA estimates US gasoline prices at the pump will average $3.31 across the country this season and it remains somewhat unclear how prices will impact consumer spending in the tight economic environment. Prices are slated to be sharply lower than last year’s high which could provide optimism, but higher costs endured over a long period of time may also have consumers less willing to spend on travel.
Crude
- OPEC+ is expecting to announce whether they will extend production cuts next week.
- WTI futures may look to test resistance at $80 today and a close above would be a bullish indication. The prompt contract hasn’t traded above $80 since early November.
- Brazil’s crude production rose 7.5% to 3.52 mbpd y/y in Feb, according to oil regulator ANP.
- Chinese manufacturing data showed contraction for the fifth consecutive month in February, according to their official survey.
- US January Personal Consumption Expenditure fell in line with estimates yesterday at 2.8%
- US ISM Manufacturing PMI will be reported at 9:00 am CT.
- Baker Hughes will report rig counts at 12:00 pm CT
- As of 8:14 am CST: Brent crude oil up $1.35 to $83.26, US dollar index up $0.010 to 104.166 while the nearby e-mini S&P 500 futures contract is down 1.25 to 5102.00.
Diesel
- India’s Feb diesel consumption rose 6% y/y according to Government data.
- Russian diesel exports from Primorsk are expected to fall 13% to 1.73 MT in March.
Gasoline
- India’s Feb gasoline consumption rose 8.6% y/y according to Government data.
- With the expiration of the March RBOB contract, the continuous daily chart gapped sharply higher due to the transition in RVP requirements.
Propane
- Conway is trading at .7925 while Belvieu is trading at .8550.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8100.
- Propane’s value to crude may provide a cushion to resist moving higher with crude.
Natural Gas
- Overnight weather runs added 4.5 HDDs in the two week forecast.
- In 2023, the US was the largest LNG supplier to Europe for the third consecutive year, accounting for nearly 50% of total EU LNG imports.
- The EIA reported nat gas stocks fell 96 Bcf last week.
- Total gas inventories are 498 Bcf above 5-year average levels.
Chinese Demand: A contracting manufacturing sector in China is providing headwinds for oil demand growth. While travel data has suggested recovery, several economic sectors have yet to follow suit.
