Outlook: Energies are mixed this morning with diesel leading the complex up over 4 cents. Oil prices are up on the day but remain on track for a weekly loss of around $2.50. If that holds, this would be the largest weekly decline since November 2023. President Trump introduced fresh bearish pressure yesterday after he urged OPEC to increase production to reduce oil prices. Trump has also put emphasis on increasing oil production domestically to reinforce growing supply forecasts. Trump said lower energy prices will support the fight against inflation which could become even more crucial if tariffs are put in place on February 1st as planned. Demand chatter has been quiet lately but could garner more focus as the dust settles following the inauguration. Look for trade to remain choppy as the market navigates headline to headline.
Crude
- WTI is on track to close lower on the week for the first time in 2025.
- Yesterday, President Trump demanded that OPEC increase production to reduce the price of oil.
- Freight rates for Russian EPSO Blend Oil loading from the far Eastern of Kozmino have risen 5x following the recent wave of US sanctions.
- Chevron completed an expansion at Kazakhstan’s Tengiz oil field, which is expected to ramp up to 1 mbpd of production half way through this year. (BBG)
- The EIA reported crude stocks fell 1.6 million barrels last week vs +1.6mb est.
- US input to refiners plunged 1.1 mbpd to 15.5 mbpd last week.
- US equities have flipped back to all-time highs this week after starting the year trending lower.
- As of 8:36 am CST: Brent crude oil up $0.47 to $78.76, US dollar index down $0.380 to 107.667 while the nearby e-mini S&P 500 futures contract up 1.25 to 6152.00.
Diesel
- The EIA reported diesel stocks fell 3 million barrels last week vs +300kb est.
- US diesel demand rose 7% to 4.1 mbpd last week which is trending with 5-year average levels.
- 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 EIA reported gasoline stocks 2.3 million barrels last week which aligned with industry expectations.
- US gasoline demand continues to struggle falling 3% to 8.1 mbpd, which is approaching 5-year lows.
- 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 .9225.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.8050.
- Conway propane is trading at 52% to WTI.
- The EIA reported propane stocks fell 3.7 million barrels last week which fell within the range of industry estimates.
Natural Gas
- Overnight weather runs removed 2 HDD through the two-week forecast.
- The EIA reported a draw of 223 Bcf last week which undershot most industry estimates.
- President Trump said the US would guarantee LNG supplies to Europe as they move away from Russian gas.
- LNG feedgas demand fell 10.5 Bcf/d yesterday to the lowest since April 2024.
Continuous Weekly WTI:
