Outlook: Energies are sliding lower today after digesting the morning data dump. The OPEC monthly report and the US CPI report were both released at 7:30 am this morning and the bears are looking to take control as the dust settles. OPEC reported their crude production rose in February despite ongoing voluntary production cuts. They left their global oil demand forecast unchanged at 2.25 mbpd which sits well above the IEA and EIA projections for this year. With the OPEC production increase and reports that Russia's crude exports are nearly 500,000 bpd above their pledged cut, a lack of compliance appears to be the bearish fundamental theme. As for the CPI report, a higher inflation reading for both the headline and core could present challenges for the Fed. Sticky inflation could incentivize to leave interest rates higher for longer which would provide headwinds for energy demand. Prices could remain volatile this week with a plethora of reports still due to be released, including the EIA STEO report today and EIA inventory data tomorrow morning.
Crude
- OPEC released its monthly report today which showed production up 203,000 bpd to 26.57 mbpd in February. They left their oil demand growth forecasts unchanged at 2.25 mbpd.
- Russia’s seaborne crude exports rose 590,000 bpd to 3.7 mbpd last week, which is the highest level this year. The weekly print is 490,000 bpd above its OPEC+ pledged cut. (BBG)
- Iraq increased its oil price to Asia by $0.20, suggesting demand supports the higher pricing.
- The number of ships sailing around the southern tip of Africa is up 85% from the first half of December due the Houthi attacks.
- The US was once again the leading oil producer in the world for the sixth consecutive year, producing 12.9 mbpd on average in 2023 per EIA data.
- Reuters estimates crude stocks rose 900,000 barrels last week.
- The API will report its inventory survey at 3:30 pm CT.
- The US Consumer Price Index, a key measure of inflation, rose 3.2% y/y vs 3.1% est.
- As of 8:05 am CST: Brent crude oil down $0.15 to $82.06, US dollar index up $0.086 to 102.959 while the nearby e-mini S&P 500 futures contract is up 17.25 to 5140.00.
Diesel
- Reuters estimates diesel stocks rose 400,000 barrels last week.
- Further delays for BPs Whiting refinery have provided support to regional diesel basis.
- Two major refineries in France have been knocked offline this week which could contribute to tighter stocks near-term.
Gasoline
- Reuters estimates gasoline stocks fell 2.1 million barrels last week.
- TotalEnergies Port Arthur refinery partially shut due to a pipe leak yesterday.
- A Ukrainian drone attack hit Russia’s Lukoil refinery this week as energy infrastructure continues to be the target. The refinery produces 11% of the country’s gasoline and 6.4% of the countries diesel fuel.
Propane
- Conway is trading at .6975 while Belvieu is trading at .7600.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7700.
- The weakness in the front end of the curve has flipped the market back into Contango through Feb.
Natural Gas
- Overnight weather runs removed 2 HDDs in the two week forecast.
- European gas storage is 61% full which is 18% above the 5-year average level.
- CNX Resources said today it expects to lower natural gas production due to weak prices.
Continuous Weekly Propane Swap Indic: Please reach out for updated swap values or to let us know what targets you might have for the next few demand seasons.
