Outlook: The energy complex is moving marginally higher today as traders navigate each new action from President Trump. February 1st is the date to watch with tariffs expected to be imposed on Canada, Mexico, and China among others. Regarding Russia, President Trump said on Truth Social yesterday that he is not looking to hurt Russia but will have no choice but to introduce more sanctions if a deal to end the war is not reached. India, which had been a key buyer of Russian crude oil, is in talks with Saudi Arabia and Abu Dhabi to discuss long-term supply options as they look to comply with renewed sanctions. The Gulf is looking to thaw out through the weekend after a significant winter storm caused widespread shutdowns. Refinery outages have appeared limited so far but we’ll see what next week’s EIA report says with refinery utilization. The EIA will release its inventory stats for last week later this morning. The API survey yesterday afternoon appeared bearish relative to early industry estimates.
Crude
- Tariff concerns remain a key bearish pressure across energies.
- Saudi Arabia’s Crown Prince Mohammed Bin Salman told President Donald Trump he’s willing to expand investments and trade with the US in the coming four years by $600 billion. (BBG)
- India’s crude imports in December rose by 1.5% y/y to 20 million tons, highest since August. (BBG)
- The prompt continuous WTI spread has fallen over 60 cents this week with current trade around $0.69.
- Reuters estimates crude stocks fell 1.6 million barrels last week.
- The API survey showed crude stocks rose 1 million barrels last week.
- The EIA will report inventories today at 11:00 am CT.
- As of 8:36 am CST: Brent crude oil down $0.18 to $79.12, US dollar index up $0.018 to 108.080 while the nearby e-mini S&P 500 futures contract up 30.25 to 6114.00.
Diesel
- Europe’s diesel imports are expected to fall to 797,000 bpd this month, lowest since October 2017.
- Continuous HO closed below its 9 DMA near $2.5434 yesterday and is dipping below $2.50 today.
- Reuters estimates diesel stocks rose 300,000 barrels last week.
- The API survey showed diesel stocks rose 1.9 million barrels last week.
- Rack basis discounts may be presenting opportunities to fill storage and hedge by selling futures. This strategy will put you in a long basis position and protect against downward futures moves.
Gasoline
- The API survey showed gasoline stocks rose 3.2 million barrels last week.
- Reuters estimates gasoline stocks rose 2.3 million barrels last week.
- A fire at the CVR Coffeyville refinery has been supportive for group basis this week.
Propane
- Prompt Conway futures are trading at .9125 while Belvieu is trading at .9325.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.8075.
- Conway propane is trading at 52% to WTI.
Natural Gas
- Overnight weather runs removed 1 HDD through the two-week forecast.
- The DOE is delaying the comment period associated with a federal study of economic and environmental impacts on LNG exports. President Trump has urged advisors to take a patient approach.
- Freeport LNG is expected to return to operation today.
- Reuters estimates nat gas stocks fell between 225 and 300 Bcf last week.
Global Oil Balances: The IEA and EIA have presented contrasting views with their monthly forecasts released earlier this month.
