Outlook: The energy complex appears to be in holiday mode with values hovering near unchanged on the day. Refined products are outpacing crude which is providing some positive movement across crack spreads, however. A government shutdown was avoided over the weekend as Congress passed a spending extension through March. The US dollar is up over 500 points on the morning but remains more of a limiter than a driver for energy. Natural gas has even gone quiet to start the week, observing marginal losses despite a large swing higher in HDDs over the weekend. Look for weather implications to impact both natural gas and heating oil ahead of the January contract expirations. We will get early inventory estimates this week, including the API survey on Tuesday afternoon. The EIA report will be delayed until Thursday this week due to Christmas on Wednesday. With liquidity down this week, the market will remain vulnerable to volatile swings if a significant event were to develop. Lately those have been few and far between.
Crude
- US Congress passed an extension of spending authority to avoid a government shutdown.
- Managed money net length in WTI rose by 59.4k lots through last Tuesday, which was the largest increase in over a year. Prices were up $1.90 during that period.
- India’s crude imports rose 2.6% y/y in November. (Reuters)
- Russia’s seaborne crude exports are on track to fall this year, averaging 2.2 mbpd which is 9% below last year and 10% below 2022 levels. (BBG)
- Nigeria is expected to export 241,000 bpd of crude in February, the highest seasonal level since February 2021. (BBG)
- Baker Hughes reported US oil rigs rose by 1 to 483 last week.
- As of 8:23 am CST: Brent crude oil down $0.28 to $72.66, US dollar index up $0.497 to 108.118 while the nearby e-mini S&P 500 futures contract down 6.25 to 5995.00.
Diesel
- Continuous HO is testing support at its 100 DMA today near $2.2284. The 50 DMA could offer additional support near $2.2180 if weakness persists.
- Colder temps leaving the NE may leave diesel as the weak leg heading into expiration of the January contract next week.
- Managed money increase heating oil net length by 14.6k lots through Tuesday last week. (-10.1k shorts, +4.4k longs)
Gasoline
- Continuous RBOB again respected support near $1.90 last week which will be a level to watch again this week. A nearby upside target is the 9 DMA near $1.96.
- Managed money decreased RBOB net length by 6k lots through Tuesday last week. (-4.5k longs, +1.4k shorts)
Propane
- Prompt Conway futures are trading at .7300 while Belvieu is trading at .7650.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.7400.
- Conway propane is trading at 45% to WTI.
Natural Gas
- Weekend weather runs added 16 HDDs through the two-week forecast.
- Baker Hughes reported nat gas rigs fell by 1 to 102 last week.
- Managed money increased natural gas net length by 13.5k lots through last Tuesday. (-19k shorts, -5.6k longs)
Continuous Daily 321 Crack:
