Please join us for the upcoming CHS Hedging Agri-Energy Virtual Summit February 25-27. Please find the link (here) for details. As a benefit to consulting customers, please reach out to us for a promo code for the event.
The energy complex is lower this morning, and on track to settle lower for the second straight week. Tariffs are still the main factor driving markets and participants are waiting to see if oil will be included. Yesterday afternoon, President Trump stated the final decision on crude’s inclusion would be made last night. However, last night came and went and there was no additional clarity. The President did make comments surrounding crude tariffs by stating, “Oil is going to have nothing to do with it as far as I’m concerned,” and “We’ll see – it depends on what their price is.” Hopefully, we receive additional clarity today, but now it seems like crude will not be included. WTI crude futures and RBOB futures are hovering around 3-week lows, while diesel futures remain slightly elevated.
OPEC+ is scheduled to meet on February 3 to discuss its production policy moving forward. The consensus in the market is the group will move ahead with its current plan to start unwinding production cuts in April. There are some rumblings the group could push back the production increase to the second half of the year, but that remains unlikely. The current plan includes gradual unwinding of 2.2 million cuts with monthly increases of 138,000 bpd, lasting 18 months until September 2026.
Crude
- Goldman Sachs increased their 2025 and 2026 average Brent forecast to $78 from $76, and $73 from $71 due to lower global supply expectations.
- Alberta’s oil production rose to record levels in December, reaching 4.26 million bpd. This marks a 58K bpd increase versus November. (BBG)
- Crude flows through Russia’s port of Ust-Luga fell to 0 on Wednesday following Ukraine’s drone strike on a pumping station. Last year, the port handled around 650K bpd of crude, or roughly 20% of Russia’s total seaborne crude flows.
- Production at Iraq’s Rumaila Field is still constrained to 900K bpd yesterday following the January 24th fire at a tank. (BBG) The field averages 1.4 million bpd of production, making up around 30% of Iraq’s total production.
- Exxon Mobil beat Wall Street’s estimate for fourth-quarter profit as higher oil and gas production offset lower oil prices and weaker refining margins. Fourth quarter profit was $7.39 billion, while profit per share was $1.67, beating analyst estimates of $1.56.
- Chevron posted fourth-quarter revenue of $52.23 billion, up more than 10% year-over-year and well above analyst expectations. However, profit and profit per share were below analyst expectations as refining posted its first loss in four years.
- As of 8:55 am CST: Brent crude oil is down $0.20 to $76.67, the US dollar index is up 0.599 to 108.230 while the nearby e-mini S&P 500 futures contract is up 28.25 at 6127.50.
Diesel
- Diesel futures are being supported by the converging 9- and 20-day moving averages.
- Diesel inventory is currently 6% below the five-year seasonal average.
- The heat crack spread is just under $32, trading near the highest level since March 2024.
Gasoline
- Gasoline futures are meeting resistance at the 9- and 20-day moving averages.
- Gasoline inventory is 1% above the five-year seasonal average.
- The gas crack spread at $12.50 is near the bottom of the five-year range.
Propane
- Conway is trading at .8900 while Belvieu is trading at .9025.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.7913.
- Conway propane is trading at 52% to WTI.
Natural Gas
- Overnight weather runs were net bearish, removing almost 4 HDDs from the two-week forecast.
- The EIA reported a 321 Bcf draw from U.S. gas storage, higher than the Platts forecast of 305 Bcf.
- There have only been three instances since 2015 where the EIA reported a withdrawal of over 300 Bcf, with yesterday’s occurrence being the first since the cold snap in February 2021. (GS)
Prompt Weekly Natural Gas Futures: Natural gas futures are on track for the largest weekly price decline since December 2022 as many HDDs have been removed from the forecast. 
