Outlook: The energy complex is hovering near even lacking a sense of direction. What looked like bullish data from China overnight has not changed overall sentiment. While Chinese crude imports saw year-over-year growth, imports remained lower than in December which may have been offsetting. The trade is looking for consistent economic growth out of China to feel more confident that demand data is reliable. Macroeconomic sentiment is feeling neutral this week with Powell reinforcing caution while still forecasting cuts this year. The ECB kept their primary interest rates unchanged today and the high interest rate environment throughout several major economies looks here to stay for a few more months. The US Presidential State of the Union is scheduled for tonight and could impact overnight markets based on energy-related policy rhetoric. Given it's an election year that provides uncertainty after November, it seems unlikely we’ll see a drastic reaction to the address. The volatile Nonfarm payroll report will help close the week out tomorrow morning.
Crude
- Chinese crude imports beat estimates, rising 5.1% y/y in for January and February.
- The US said it is ready to pursue further action against Iran at the International Atomic Energy Agency.
- A missile strike on a commercial ship in the Gulf of Aden resulted in the first confirmed deaths of crew since the Houthi attacks began.
- The EIA reported US crude stocks rose by 1.3 million barrels last week.
- US refinery utilization recovered 3.4% to 84.9% last week.
- US crude production fell 100,000 bpd to 13.2 mbpd.
- Fed Chair Jerome Powell’s testimony yesterday maintained a hawkish view but stated interest rate cuts are still expected this year.
- The US dollar has fallen to its lowest level since early February.
- The US Presidential State of the Union is tonight at 8:00 pm CT.
- US nonfarm payrolls will be reported tomorrow at 7:30 am CT.
- As of 8:06 am CST: Brent crude oil down $0.26 to $82.70, US dollar index down $0.070 to 103.300 while the nearby e-mini S&P 500 futures contract is up 21.25 to 5133.00.
Diesel
- The EIA reported diesel stocks fell more than expected at 4.1 million barrels last week.
- US diesel demand rose 15.2% w/w to 4 mbpd.
Gasoline
- The EIA reported gasoline stocks fell more than expected at 4.4 million barrels last week.
- US gasoline demand rose 6.4% w/w to 9 mbpd.
Propane
- Conway is trading at .7575 while Belvieu is trading at .8225.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8100.
- The EIA reported propane stocks fell less than expected at 4,000 barrels last week.
- The US exported 73% of production last week.
Natural Gas
- Overnight weather runs added 2 HDDs in the two week forecast.
- Reuters estimates nat gas stocks fell between 35 and 46 Bcf last week.
- The EIA will report inventories at 9:30 am CT.
Continuous Daily WTI: WTI futures traded above the upper Bollinger yesterday but couldn’t hold through the close. The rejection may cause a bounce to test support at the middle Bollinger.
