Outlook: Bearish momentum in energies looks to continue this week. WTI is trading back below its 200-day moving average after showing a key reversal lower on Friday. Diesel is leading the loss column down for 3 cents and may target the recent March 6th low of $2.5912 today. A move below this level would be the lowest since early January. RBOB futures are moving against the grain for now trading in the green up a penny. Both RBOB and HO remain in backwardation through the end of the year reflecting tight supplies. Fresh market drivers are light so far today but the docket is full for the rest of the week which should help firm things up. OPEC’s monthly report should be out first thing tomorrow morning, followed by the US inflation print. Headline CPI is expected to remain flat month-over-month at 3.1%.
Crude
- Saudi Arabia will supply 46 million barrels of contractual volumes to China in April, 3 mb less than March, and follows a price increase announced last week. (BBG)
- Russia said their decision to cut 471,000 bpd for Q2 was driven by lower demand forecasts. (BBG)
- Chinese state refiners will increase crude processing volumes to 10.36 mbpd, up 11% m/m. (BBG)
- China’s CPI rose for the first time since August, marking a positive signal from the recent stimulus efforts.
- BP’s Whiting Refinery may need as much as two more weeks to restore full production according to a Bloomberg article.
- Money managers have boosted their WTI net length to its highest level since October.
- Baker Hughes reported US oil rigs fell by 2 last week to 504.
- Monthly market reports from OPEC, EIA, and the IEA are due this week.
- US CPI will be reported tomorrow morning at 7:30 am CT.
- As of 8:36 am CST: Brent crude oil down $0.59 to $81.49, US dollar index up $0.130 to 102.842 while the nearby e-mini S&P 500 futures contract is down 14.25 to 5114.00.
Diesel
- Nymex HO net length fell by 7.5k lots last week. (COT)
- Group 3 diesel basis has risen nearly 10 cents since the beginning of the month.
Gasoline
- Nymex RBOB net length fell by 969 lots last week. (COT)
Propane
- Conway is trading at .7200 while Belvieu is trading at .7825.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7900.
- The weakness in the front end of the curve has flipped the market back into Contango through Feb.
Natural Gas
- Overnight weather runs added 10 HDDs in the two week forecast.
- Temperatures through March 18th are expected to be significantly warmer than the 10-year average.
- Baker Hughes reported US nat gas rigs fell by 4 to 115 last week.
Continuous Daily WTI: With the move below the 200-day, the 100-day moving average will slide in as then next downside target for crude.
