Outlook: Despite a reversal yesterday afternoon, energies are finding marginal strength here this morning. Fear of tighter sanctions against Russia and Iran are being cited as a bullish catalyst this week. News that China may begin restricting sanctioned vessels from several of its major ports could be a significant development if adequately enforced. China has been the primary buyer of sanctioned oil thus far which has allowed countries like Russia and Iran to dodge the financial pressure from sanctions. The relationship between the US and China will be an important dynamic to monitor across many commodities next year. Look for the EIA stats tomorrow along with the Fed meeting minutes to provide further influence this week. Nonfarm payrolls is a closely tracked report as an indication for the health of the labor market and will be reported Friday morning.
Crude
- China’s Shandong Port Group issued a notice on Monday banning US-sanctioned oil vessels from its network of ports. These ports had been major supply points of sanctioned oil. (Reuters)
- Russia reported its pumped 8.971 mbpd of oil in December, which was 7,000 bpd below its OPEC+ quota. Russia’s baseline production is 9.949 mbpd.
- Goldman Sachs expects the cold weather working across to the US to increase oil demand by 100,000 bpd.
- Eurozone inflation rose in December, which was expected but also a move in the wrong direction.
- Reuters estimates crude stocks fell 300,000 barrels last week.
- The API inventory survey will be reported at 3:30 pm CT.
- FOMC meeting minutes will be reported on Wednesday and US nonfarm payrolls will be reported on Friday.
- As of 9:53 am CST: Brent crude oil up $0.67 to $76.98, US dollar index up $0.234 to 108.491 while the nearby e-mini S&P 500 futures contract down 34.25 to 5985.00.
Diesel
- Reuters estimates diesel stocks rose by 500,000 barrels last week.
- Continuous diesel continues to find resistance at its 200 DMA after failing to close above again yesterday. The 200 DMA sits at $2.3598 today.
- Both Group and Chicago diesel basis saw declines yesterday. A lack of local demand and higher futures prices could create steeper basis discounts. Be conscious of your rack basis values if you are looking to store product.
Gasoline
- Reuters estimates gasoline stocks rose 500,000 barrels last week.
- Continuous RBOB is finding support at its 100 DMA near $2.0282.
Propane
- Prompt Conway futures are trading at .8625 while Belvieu is trading at .8750.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.8075.
- Conway propane is trading at 46% to WTI.
- Propane values have risen ~15 cents over the last two weeks.
- January HDDs are around 105% of the 30-year average.
Natural Gas
- Natural gas continues to find volatility from weather models. The morning move can quickly shift when mid-day weather models populate.
- Reuters estimates nat gas stocks fell between 33 and 80 Bcf last week.
Brazil’s Crude Exports: Oil surpassed soybeans as Brazil’s top export in 2024. Brazilian crude exports rose 5% to 44.8 billion during the year and exports in December were just shy of 200,000 bpd. Shipments overall rose 10% on the year.
