Outlook: The energy complex is finding strength today, reinforcing the bullish trend that began back in December. The steady climb in prices has been supported by a gradually shifting fundamental environment. Over the weekend, Ukraine struck another Russian refinery and it’s estimated that 7% of Russia’s refining capacity remains offline. While refined product supplies tighten, excess crude is likely to hit the export market despite OPEC+ curbs. Iraq is another member who’s guilty of overproduction in the first two months of the year but stated over the weekend that they will increase cuts moving forward to rebalance their commitment. Overseas demand for US crude has been strong amidst the Russian price cap and OPEC+ cuts and domestic demand growth may increase pressure on crude stocks as refineries come out of spring maintenance. BP Whiting announced it has returned to full production after a power outage caused a full shutdown on February 1st. Midwest product inventories did see declines with the key supply point offline but remain well supplied overall.
Crude
- Ukraine struck Russia’s Syzran refinery with a drone strike over the weekend. The 180,000 bpd facility shut down its only operating primary refining unit on Saturday. (BBG)
- Russia’s oil processing rate rose 7,000 bpd from March 1-13 to 5.44 mbpd. (BBG)
- Iraq will reduce crude exports to 3.3 mbpd in the coming months to absorb any unintended increases in January and February. (Reuters)
- Saudi Arabia’s crude output rose to 8.956 mbpd in Jan from 8.944 mbpd in Dec, according to JODI data. (Reuters)
- BP Whiting has returned to full operation after being shut due to a power outage on Feb 1st.
- WTI settled above its upper-Bollinger band on Friday.
- Chinese economic data showed strong growth in the industrial and service sector for Jan and Feb.
- Baker Hughes reported US oil rigs rose by 6 to 510 last week.
- As of 8:02 am CST: Brent crude oil up $0.18 to $85.52, US dollar index up $0.010 to 103.444 while the nearby e-mini S&P 500 futures contract is up 38.25 to 5221.00.
Diesel
- India’s diesel sales fell by 0.5% in the first half of March. (BBG)
- Nymex heating oil net length fell by 5.8k lots last week.
- Continuous diesel futures are trading above the 100-day moving average today. A close above this level would be a bullish technical indication.
Gasoline
- India’s gasoline sales fell by 0.4% m/m in the first half of March, but rose 3.5% y/y.
- Nymex gasoline net length rose by 6.7k lots last week.
Propane
- Conway is trading at .7400 while Belvieu is trading at .7975.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8000.
- Conway is trading at 37% value to WTI.
Natural Gas
- Overnight weather runs added 11 HDDs in the two week forecast.
- The UAE has agreed to sell LNG to Germany for 15 years starting in 2028.
- Baker Hughes reported nat gas rigs rose by 1 to 116 last week.
Continuous Daily HO: The prompt diesel contract closed above its 50-day moving average on Friday and looks to challenge the 100-day moving average today. The 200-day moving average will be the next upside target if momentum holds today.
