Energies are trading lower this morning on negative Chinese spending data and profit-taking on last week’s energy rally. Retail sales in China were disappointing, keeping the door open for policymakers to increase stimulus measures to boost consumer spending. Retail sales in November grew at 3% in November, its weakest pace in three months and well below the 4.8% increase in October. At a conference over the weekend, the director of the People’s Bank of China’s research bureau stated that China has room to cut interest rates and the reserve requirement ratio next year and intends to in a timely manner (BBG). Expect energy prices to remain capped unless we see a drastic change in spending in the world’s second-largest economy and largest crude importer. Given the 6% rise in crude and product prices last week, some traders seized the opportunity and took profits. Crude prices are still rangebound and waiting for a catalyst to move prices outside of the $67-$73 trading range we have been stuck in since October 15.
Crude
- Libya’s National Oil Corp. declared force majeure at the 120 kbpd Zawiya refinery due to a conflict that caused a fire after storage units were struck, causing significant damage.
- Russian President Putin extended the ban on selling crude and oil products to foreign buyers that adhere to the price cap mechanism through June 30 after Russia’s oil-export revenue fell $1.12 billion from October to November.
- China’s crude refining rose for the first time in eight months in November to 14.3 million bpd, up from 14.02 million bpd processed in October.
- The U.S. crude oil rig count remained flat at 482 for the weeks ended December 13.
- Managed money participants decreased their net length in WTI by 9.9k lots with a reduction in long positions of 6.8k lots and an increase in short positions of 3.1k lots.
- As of 9:10 am CST: Brent crude oil is down $0.35 to $74.14, the US dollar index is down $0.178 to 106.815 while the nearby e-mini S&P 500 futures contract is up 18.00 at 6073.50.
Diesel
- NYMEX heating oil net length decreased by 19k lots with a reduction of 3.7k long positions and an increase of 15.3k short positions.
- Group cash diesel prices are 10 cents below the five-year seasonal average.
- Chicago cash diesel prices are 5 cents below the five-year seasonal average.
Gasoline
- NYMEX gasoline net length increased by 6.5k lots with an increase of 5.8k long positions and a reduction of 724 short positions.
- Group cash gasoline prices are 5 cents above the five-year seasonal average.
- Chicago cash gasoline prices are 10 cents above the five-year seasonal average.
Propane
- Conway is trading at .7325 while Belvieu is trading at .7800.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.7467.
- Conway propane is trading at 44% to WTI.
Natural Gas
- Weekend weather runs came in net bearish, removing over 10 HDDs from the two-week forecast. (GS)
- U.S. natural gas consumption through September 2024 averaged 89.8 Bcf/d, up 1% from the same period in 2023. (GS)
- Dutch natural gas futures are back below 40 euros per MWh as Hungary stated it found a “legal financial solution” to allow the nation to continue paying for Russian natural gas shipments via Bulgaria without breaking U.S. sanctions. (GS)
4-Week Average Propane Demand Seasonal Chart: Warmer temperatures throughout most of the U.S. and a lack of dryer demand have limited overall propane demand. 2024 propane demand (orange line) has been well below the five-year seasonal average (purple line) all year. The lack of demand has caused a shift in the forward curve, and spot prices are now cheaper than fall/winter 25/26 prices. 
