Outlook: The energy complex is finding marginal strength this morning with crude and products all trading in the green. Oil will look to snap a streak of three consecutive weeks of declines but it may need some help with trade war concerns looming. The president announced new tariffs on steel and aluminum over the weekend and they are expected to officially be announced today. While these don’t directly impact energies, both are key inputs across the broader industry which could result in higher costs. On the bullish front, Russian sanctions are showing mixed results as seaborne exports rose by 200,000 bpd to 3.3 mbpd in January. There is a wind-down period for sanctions until March and fulfilment of previous contracts may be behind the higher print. President Trump is expected to speak with Putin this week to discuss options to end the war in Ukraine. Any headlines related to progress in those discussions could quickly turn bearish, especially if the expectation is that sanctions would be lifted. With gold hitting all-time highs again today, "buy commodities" sentiment could be behind some of the strength in energies this morning.
Crude
- President Trump announced 25% tariffs on steel and aluminum over the weekend. These tariffs are said to include Canada and Mexico despite previous delays.
- China’s retaliatory tariffs against the US are expected to take effect today.
- President Trump is expected to hold talks with Putin this week to discuss ending the war in Ukraine.
- Russia’s seaborne crude exports rose by 200,000 bpd in January to 3.3 mbpd.
- Private Asian refinery run rates fell to 43.6% last week due to Russian oil sanctions.
- Canadian pipeline operator, Trans Mountain, is considering another expansion of capacity by 200-300,000 bpd. The pipeline currently transports 890,000 bpd from Alberta to the Pacific Coast. (Reuters)
- WTI managed money net long positions registered their biggest two-week decline since August 2017. (COT)
- Gold is hitting record all time highs again to start the week.
- Baker Hughes reported US oil rigs rose by 1 last week to 480.
- As of 8:28 am CST: Brent crude oil up $0.87 to $75.55, US dollar index up $0.245 to 108.245 while the nearby e-mini S&P 500 futures contract up 31.25 to 6080.00.
Diesel
- The Nymex 321 crack rose to its highest level since August last week.
- Exxon Mobil’s Baytown refinery was halted on Saturday after a compressor trip.
- Managed money increased Nymex HO net length by 6.6k lots through Tuesday last week. (+3,370 longs, -3,209 shorts). (COT)
Gasoline
- The Nymex gasoline crack rose to its highest level since August last week.
- Managed money increased RBOB next length by 6.4k lots through Tuesday last week (-3,881 shorts, +2,475 longs). (COT)
Propane
- Prompt Conway futures are indicated at .9150 while Belvieu is trading at .9325.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.8175.
- Conway propane is trading at 54% to WTI.
Natural Gas
- Weekend weather runs added 10 HDDs through the two week forecast.
- Managed money decreased net length by 4k lots through last Tuesday (-4.6k longs, -0.6k shorts). (COT)
- Baker Hughes reported nat gas rigs rose by 2 to 100 last week.
Oil Prices: Oil prices have fallen since Trump took office but are now nearing an area that has provided firm support.
