Outlook: Energies are mixed this morning on what could be a lighter trade day due to the market holiday. It was a quieter weekend in terms of market related news which isn’t giving things a sense of direction here this morning. Reports of Ukrainian drone strikes on the CPC pipeline and the Ilsky oil refinery in Russia shed some concern although limited disruptions have developed from these strikes as of late. Russia is considering a reinstatement of a gasoline export ban; however, they are not a huge player in the gasoline export market. The US and Russia are preparing for initial talks in Saudi Arabia on Tuesday which will be closely monitored. The economic calendar is also on the lighter side for the first part of the week as the dollar bounced off multi-month lows. Inventory reports will be delayed this week due to the Monday holiday with the EIA reporting the Weekly Petroleum Status report on Thursday.
Crude
- OPEC+ is considering delaying its monthly supply increases planned for April according to a delegate. (BBG)
- A Ukrainian drone strike hit Kazakhstan’s main oil export pipeline in Russia over the weekend. (Reuters)
- A Ukrainian drone strike hit Russia’s Ilsky oil refinery in the southern Krasnodar region overnight which halted operation. (BBG)
- Russia’s refinery runs have increased to 5.13 mbpd over the last week compared to 5.10 mbpd in the previous week. (BBG)
- The US and Russia are expected to continue peace talks on Tuesday this week. (Reuters)
- The prompt WTI spread has flipped into contango this morning with the front month trading at a discount to the second month contract.
- Baker Hughes reported US oil rigs rose by 1 to 481 last week.
- Managed money boosted short positions in US crude futures to the highest since September.
- As of 8:09 am CST: Brent crude oil up $0.08 to $74.83, US dollar index up $0.119 to 106.829 while the nearby e-mini S&P 500 futures contract up 15.25 to 6147.00.
Diesel
- Managed money increased Nymex heating oil net length by 7.8k lots to 14k lots, which is highest in nearly a year.
- Diesel futures remain backwardated through the August contract with August trading near a 16 cent discount.
- Group 3 basis -0.75 to -17.00c.
- Chicago diesel basis -7.5 to -27.50c.
Gasoline
- Russia plans to discuss a full gasoline export ban on February 20th this week.
- Managed money increased bullish Nymex gasoline bets by 1,909 lots to 48,683, highest in 3-weeks.
- March-April spread trading around -22.50 today.
Propane
- Prompt Conway futures are indicated at .9150 while Belvieu is trading at .9175.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.8250.
- Conway propane is trading at 54% to WTI.
- US propane weighted HDDs for February are 40 higher than the 30-year average and 209 higher than last year.
- March HDDs are forecasted to be nearly a 100 higher than last year but 23 below the 30-year average.
Natural Gas
- Overnight weather runs removed 1 HDDs through the two-week forecast.
- US natural gas weighted HDDs are estimated at 542 for March, up from 456 last year and below the 30-year average of 570.
- Baker Hughes reported US nat gas rigs rose 1 to 101 last week.
- US natural gas rigs are down 20 y/y.
Continuous Daily NG: Natural gas is the lone mover with conviction this morning trading down over 10 cents. A pause in the HDD rally over the weekend may be allowing for some profit taking. Look for the 50 DMA to provide support.
