Outlook: Energies are off the overnight lows this morning but remain on a bearish trajectory. Oil prices fell $2.75 last week which was the first weekly decline this year. Equities and the US dollar are off this morning ahead of another Fed rate decision this week. China’s AI launch over the weekend is being cited for the pressure. A kerfuffle with Columbia over the weekend is the top story across many sources this morning. Columbia exports around 210,000 bpd of crude to the US but a supply disruption was avoided with the issue quickly being resolved after substantial tariffs were threatened. Tariffs elsewhere remain on the docket come February 1st. The aggressive trade tactics coming to fruition may be creating concern for the health of the economy and the Fed will have its work cut out to navigate through this volatility. The CME FedWatch tool suggests the first rate cut of the year won’t happen until May.
Crude
- The US briefly imposed sanctions against Colombia over the weekend after a dispute with accepting deported migrants. Colombia sends around 210,000 bpd of crude to the US, however, a deal was quickly struck. (Reuters)
- Russian President Vladimir Putin said on Friday that he and Trump should meet to talk about the Ukraine war and energy prices. (Reuters)
- India’s refinery throughput in December rose 5.2% y/y to 5.64 mbpd. (Reuters)
- Baker Hughes reported US oil rigs fell by 6 to 472, lowest since December 2021.
- The six-rig decline in the Permian was the biggest weekly drop since August 2023.
- China’s NBS manufacturing data was reported at 49.1 vs 50.1 est.
- The Fed will announce its rate decision on Wednesday. Rates are expected to be left unchanged.
- As of 8:48 am CST: Brent crude oil down $0.28 to $78.22, US dollar index down $0.269 to 107.174 while the nearby e-mini S&P 500 futures contract down 102.25 to 6031.00.
Diesel
- Goldman Sachs says their diesel margin forecasts are modestly below forwards with risks skewed to the downside.
- CVR announced planned maintenance ahead of schedule at its Coffeyville refinery following a fire last week.
- Managed money flipped Nymex heating oil net length back to a net-long 3.3k lots, biggest since May.
- 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
- Goldman Sachs forecasts US retail gas prices to average $3.30 in 2025 and $3.10 in 2026.
- Managed money Nymex gasoline net-longs fell by 6.6k lots to the lowest since October.
Propane
- Prompt Conway Swaps are indicated at .9125 while Belvieu is trading at .9225.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.8050.
- Conway propane is trading at 52% to WTI.
- Propane indicated 2 cents lower on the morning.
Natural Gas
- Weekend weather runs removed 23 HDD through the two-week forecast.
- According to a BBG report, the EU is unlikely to propose phasing out LNG gas from Russia.
- Managed money decrease Nymex NG net length by 9k lots through Tuesday last week.
- Baker Hughes reported nat gas rigs rose by 1 to 99 last week.
Continuous Daily HO: Diesel futures are the weak leg today. Look for last week’s low of $2.4421 as the first line of support this week.
