Outlook: Energies were facing losses across the board early this morning but have since lifted off the lows. Crude and diesel are hovering around even for the day while gasoline is holding a weaker tone down ~3 cents. Profit-taking triggered yesterday may have spilled over to today’s session while disappointing headlines from the Chinese National Party conference provided fundamental backing. China set an aggressive growth target for the year of 5% but a lack of compelling stimulus has participants worried this goal is achievable. Chinese demand growth is still a catalyst in the global oil demand growth picture this year. The trade will be looking for signs of progress in refinery maintenance from the fundamental reports this week with the API due to report this afternoon at 3:30 pm CT.
Crude
- The Chinese National Party conference failed to produce what the market would view as an adequate stimulus package which is creating bearish pressure this morning.
- China set its annual growth target at 5% which is viewed as an aggressive target.
- Energies found selling pressure yesterday after WTI topped $80.
- Nearby continuous WTI futures are trading back below the 9-day and 200-day moving averages with the weakness today.
- The continuous WTI prompt spread has fallen over 50 cents in the first few sessions of March.
- Reuters estimates crude stocks rose 2.6 million barrels last week.
- Reuters estimates refinery runs rose by 1.4% last week.
- US ISM Services PMI will be reported at 9:00 am CT.
- The API will report its inventory survey at 3:30 pm CT.
- As of 8:35 am CST: Brent crude oil down $0.40 to $82.40, US dollar index down $0.005 to 103.827 while the nearby e-mini S&P 500 futures contract is down 26.25 to 5113.00.
Diesel
- Reuters estimates diesel stocks fell 1 million barrels last week.
- Group 3 spot diesel basis has risen 30 cents over the last month and now trades around -10c.
- Chicago diesel basis has risen ~15 cents since the start of February but is 53 cents off its low from late January.
Gasoline
- Reuters estimates gasoline stocks fell by 1.6 million barrels last week.
- Group 3 gasoline basis has risen ~13 cents since the beginning of February.
- Chicago gasoline basis has risen ~25 cents since the beginning of February.
Propane
- Conway is trading at .7725 while Belvieu is trading at .8075.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8100.
- Propane will likely look to follow crude lower with US demand remaining soft.
Natural Gas
- Overnight weather runs removed 4 HDDs in the two week forecast.
- Gas producer EQT announced they will curtail production by 1 Bcf/d due to low prices and elevated storage.
- Reuters estimates nat gas stocks fell between 35 and 46 Bcf last week.
Continuous Daily NG: Natural gas looks to have put in the low for the near future as producers begin to scale back production due to low prices.
