Outlook: The energy complex is facing selling pressure today leaving losses across the board. Diesel futures are the weak leg today trading down nearly 10 cents as the country works its way out of this deep freeze. Trump's first day in office sent a clear message that domestic energy will be a priority, which shouldn’t be a surprise, but may still be a driver behind today’s move. Comments regarding Venezuelan oil and the Strategic Petroleum Reserve could be viewed as bullish but have taken a back seat. The tariff decision for Canada and Mexico has been punted to February 1st and any rhetoric in the lead-up could create volatile swings. Absent from day 1 commentary were Russian and Iranian sanctions but neither should be discounted from short-term influence. Domestic inventory reports will be delayed by a day this week due to the Monday holiday. Trump headlines, however, are likely to overpower fundamental and technical indications this week.
Crude
- Russia’s four-week average crude shipments fell to 2.94 mbpd, which was the fourth consecutive week below 3 mbpd, and a 16-month low. (BBG)
- President Trump said he is thinking of imposing a 25% tariff on imports from Canada and Mexico from Feb 1, rather than on his first day in office. (Reuters)
- President Trump said his administration will “probably” stop buying oil from Venezuela. The US is the second biggest buyer of Venezuelan oil behind China. (Reuters)
- President Trump said he intends to fill the Strategic Petroleum Reserve all the way to the top. (BBG)
- India has received 4.5 million barrels of crude from Russia on sanctioned vessels since the US announced new measures on January 10th. (BBG)
- Goldman Sachs estimates the oil market is pricing in a 40% probability of 25% US tariff on Canadian goods.
- WTI net bullish bets fell for the first time in five weeks through last Tuesday. (COT)
- Baker Hughes reported oil rigs fell by 2 to 478 last week.
- Today is LTD for February WTI.
- As of 9:08 am CST: Brent crude oil down $1.03 to $79.12, US dollar index down $0.934 to 108.413 while the nearby e-mini S&P 500 futures contract up 28.25 to 6061.00.
Diesel
- The Nymex heating oil net-short position narrowed by 9k lots to the smallest since July; 5th straight net addition, and the longest run since August 2022.
- Group basis rose ~5 cents on Friday to -27c. Futures 5mo time spread trades around +17.5c.
- Continuous HO found resistance at the July high of $2.6595 and is looking at a key reversal in the extended session is weakness holds.
Gasoline
- Continuous RBOB is testing support at its 9 DMA ($2.0888) for the first time in 11 days.
Propane
- Prompt Conway futures are trading at .9675 while Belvieu is trading at .9800.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.8100.
- Conway propane is trading at 52% to WTI.
Natural Gas
- Weekend weather runs were unchanged through the two-week forecast.
- US natural gas demand is expected to reach a record high of 170 Bcf/d today.
- President Trump lifted the freeze on LNG export licenses which was put in place by the Biden Administration in January 2024.
Continuous Daily WTI: Look for the 200 DMA to provide support with the March WTI contract looking to step in the prompt spot at a ~45 cent discount to the Feb.
