Outlook: The energy complex is showing a convincing move higher this morning for crude and refined products. Natural gas has tipped over once again and is trading back below $1.70 in the prompt. Another Ukrainian wave of drone strikes has connected with Rosneft’s largest refinery and caused two primary units to shut down. This now makes two major refineries that have been knocked offline this week due to Ukrainian retaliation. Fear of further disruption and a tighter supply environment are likely the catalyst this morning. In the US, stocks are also at risk of further tightening after the API survey showed a more bullish outcome than previous industry estimates. A reported 5.5 million barrel decline in crude stocks has helped the prompt crude spread pause after falling to multi-week lows. While refinery utilization is also expected to show recovery, product stocks are again expected to decline. If this is driven by positive demand again this week, the complex should find comfort in holding its ground today. The EIA will report at 9:30 am CT.
Crude
- Ukraine launched another wave of drone attacks in Russia today, causing a fire at Rosneft’s biggest oil refinery.
- Outside market sources are seeing Iraq’s oil production 200,000 bpd higher than what was reported by OPEC’s monthly report.
- The EIA forecasts US crude production to average 13.19 mbpd in 2024 and 13.65 mbpd in 2025, up from their previous forecast of 13.1 mbpd and 13.49 mbpd, respectively.
- The EIA raised its spot WTI forecast for 2024 from $77 to $82 yesterday.
- Reuters estimates crude stocks rose 1.3 million barrels last week.
- The API survey showed crude stocks fell 5.5 million barrels last week.
- The EIA will report inventories at 9:30 am CT.
- As of 8:07 am CST: Brent crude oil up $1.55 to $83.48, US dollar index down $0.050 to 102.913 while the nearby e-mini S&P 500 futures contract is down 1.25 to 5176.00.
Diesel
- The API survey showed diesel stocks fell by 1.2 million barrels last week.
- Reuters estimates diesel stocks fell by 200,000 barrels last week.
Gasoline
- The API survey showed gasoline stocks fell by 3.8 million barrels last week.
- Reuters estimates gasoline stocks fell 1.9 million barrels last week.
- The Nymex RBOB crack has risen to its highest level since August.
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.
- The EIA’s STEO revealed expectations for nat gas consumption and production to decrease by 1 Bcf/d in 2024.
- CNX Resources said today it expects to lower natural gas production due to weak prices.
Continuous Daily RBOB Crack: The Nymex RBOB crack has risen to its highest level since August and is beginning to fill the roll gap during that time period. Supply tightness and Ukrainian attacks on Russian refineries are providing support.
