Outlook: Energies are finding strength to start the week due to several bullish drivers. The US dollar is sharply lower this morning following comments from President-elect Donald Trump regarding tariff expectations. A cheaper US dollar can be supportive for dollar-based commodities as it makes them cheaper for non-dollar currency holders. Saudi Aramco raised its oil price to Asia, which was the first increase in two months. Additionally, China’s Caixin Services PMI beat expectations to align with the positive demand view. On the supply side, the Biden Administration is expected to roll out additional sanctions against Russia before departing office. The sanctions are expected to target tankers carrying Russian product, although specific details remain to be seen. Trump is expected to take a harsher stance against Iranian oil when he takes office later this month. We’ll look to the Commitment of Traders report this afternoon to get a feel where funds finished ahead of the New Year. If the long/short ratio finished the year low, we could be seeing new money coming back in to energies with the flip of the calendar.
Crude
- President Biden is planning to ban new offshore oil and gas development along most US coastlines. The ban will affect 625 million acres of ocean. (Reuters)
- The Biden Administration plans to impose more sanctions on Russia, targeting oil revenues with action against tankers carrying Russian product. (Reuters)
- The US dollar is down over 1000 points today after the WaPo reported President-elect Donald Trump was considering tariffs that would be applied only to critical imports.
- Saudi Aramco increased its oil price to Asia. The increase follows two consecutive cuts over the last two months. (BBG)
- Libya’s oil exports rose to their high level since March 2021 with a 5.3% m/m increase in December to 1.2 mbpd. (BBG)
- Goldman Sachs expect Iranian oil production to fall by 300,000 bpd to 3.25 mbpd by the second quarter this year.
- China’s Caixin Services PMI beat expectations overnight.
- Baker Hughes reported oil rig counts fell by 1 to 482 last week. As of 9:36 am CST: Brent crude oil up $0.70 to $77.21, US dollar index down $0.617 to 108.335 while the nearby e-mini S&P 500 futures contract up 64.25 to 6053.00.
Diesel
- Continuous diesel is testing its 200 DMA for the third consecutive session. The 200 DMA sits near $2.3615.
- Heat cracks rose to their highest levels since August last week.
Gasoline
- Continuous RBOB closed above its 100 DMA on Thursday last week. This could be an area of support is the bears look to regain control.
Propane
- Prompt Conway futures are trading at .8425 while Belvieu is trading at .8625.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.7950.
- Conway propane is trading at 46% to WTI.
- Propane values are opening strong this morning trading higher by 2-3 cents.
Natural Gas
- Weekend weather runs added 10 HDDs through the two-week forecast.
- The EIA reported natural gas stocks fell 116 Bcf last week. Total gas inventories are now 67 Bcf below last years levels.
- Baker Hughes reported nat gas rigs rose by 1 to 103.
Continuous Daily HO:
