Outlook: Energies are finding strength this morning, drafting support from ongoing geopolitical conflicts over the weekend. Both Ukraine and Russia exchanged blows over the weekend with another Russian refinery being partially knocked off. Russia’s power grid was also a target with nearly a million reportedly without power. Ongoing refinery strikes should slowly contribute to tighter refined product markets while Russia may drop crude production if refinery runs remain stunted. OPEC’s Joint Technical Committee is scheduled to meet next week and early indications are they will recommend no changes to current quotas, according to Bloomberg and sources familiar with the matter. The overall trend feels higher despite 3 consecutive days of selling to end last week and the market will look for fundamental support to break through last week’s highs.
Crude
- Another Russian oil refinery had half of its capacity knocked out from a Ukrainian drone strike over the weekend.
- More than 1 million Russians are reportedly without power due to Ukrainian drone strikes.
- Ceasefire negotiations between Israel and Hamas once again stalled over the weekend.
- The US shot down six Houthi UAVs in the Red Sea after the group fired missiles toward a Chinese-owned oil tanker, according to the US Central Command.
- Global crude in floating storage rose by 87,000 barrels last week.
- Baker Hughes reported US oil rig counts fell by 1 to 509 last week.
- Total oil and gas rigs remain 18% lower than year ago levels.
- As of 9:09 am CST: Brent crude oil up $1.04 to $86.48, US dollar index up $0.191 to 104.195 while the nearby e-mini S&P 500 futures contract is down 10.25 to 5283.00.
Diesel
- Managed money net bought 30 contracts and are net long 10,365 contracts per last Friday’s COT report.
- The net spec and fund length in HO is near its lowest since last June.
- The April HO contract will expire on Thursday this week.
Gasoline
- Managed money net bought 9,700 contracts and are net long 76,541 contracts per last Friday’s COT report.
- The April RBOB contract will expire on Thursday this week.
Propane
- Conway is trading at .7825 while Belvieu is trading at .8225.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8375.
Natural Gas
- Overnight weather runs added 4 HDDs in the two week forecast.
- 2 of 3 trains at Freeport LNG are being shut down for maintenance through May.
- Baker Hughes reported nat gas rigs fell by 4 last week to 112.
Continuous HO Prompt Spread: The nearby diesel spread continues to soften after falling below 2 cents last week. The weaker tone is favorable for those look to roll short hedges this week.
