Outlook: Crude and RBOB are idle this morning while diesel and natural gas are making more convincing moves lower. Natural gas futures have traded over 30 cents lower this morning after weekend weather runs shifted considerably warmer. Diesel is also susceptible to heating demand swings but clearly to a lesser degree. There are several technical considerations worth noting this week including WTI prices which tested psychological support of $70 with a low of $69.80 this morning. This was the first dip below $70 since December 27th. Continuous diesel traded to a low of $2.4114 this morning which holds just above the 50-day moving average near $2.4015. Continuous RBOB futures closed below both the 50 & 100 DMA on Friday which could invite a test of $2.00. Geopolitical events over the weekend didn’t appear compelling enough to persuade a firm direction this morning despite Ukraine striking Russia’s largest refinery and an expected resumption of flows between Iraq and Turkey. We’ll look for fresh developments to help determine a trend for the week.
Crude
- Oil prices have slid to an 8-week low of $69.80 this morning but have drifted higher since.
- Ukrainian drones struck Rosneft’s Ryazan refinery over the weekend. The Ryazan plant is the largest in the country at 340,000 bpd.
- Iraq has agreed to export 185,000 bpd of crude from Kurdistan through the Iraq/Turkey pipeline. (BBG)
- India’s crude imports in January fell 3.1% y/y to 20.8 million tons. (BBG)
- The US is sending an envoy to the Middle East this week to negotiate an extension of the ceasefire deal between Israel and Hamas. (BBG)
- The 10-year treasury fell to its lowest level since December following reports of a new coronavirus strain being reported in China last week.
- Baker Hughes reported oil rigs rose by 7 to 488 last week.
- Managed money decreased WTI net length by 24.4k lots through last Tuesday. (COT)
- As of 8:39 am CST: Brent crude oil up $0.17 to $74.60, US dollar index up $0.035 to 106.647 while the nearby e-mini S&P 500 futures contract up 13.25 to 6042.00.
Diesel
- Warmer weather revisions may be pressuring diesel as we near the end of heating demand season.
- Managed money decreased heating oil net length by 2.1k lots (+1.5k shorts, -454 longs) through Tuesday last week. (COT)
- The 50 DMA could provide support this week to the continuous chart near $2.4015.
- Group 3 basis +4.50 to -31.00c.
- Chicago diesel basis -0.00 to -23.00c.
Gasoline
- Continuous RBOB closed below its 50 and 100 DMA on Friday.
- Managed money decreased gasoline net length by 2.9k lots (-2.9k longs) through Tuesday last week. (COT)
Propane
- Prompt Conway futures are indicated at .9175 while Belvieu is trading at .9025.
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.8350.
- June25 propane swap midpoint indication: 78.75
- Conway propane is trading at 54% to WTI.
Natural Gas
- Weekend weather runs removed 31 HDDs through the two-week forecast.
- Asia’s LNG imports are set to fall to 20.7 million metric tons in February which would be the lowest monthly reading in 2 years. (Reuters)
- US Interior Secretary Doug Burgum called for power plants in the US to increase electricity production by 10-15% to meeting growing demands, citing AI growth. (Reuters)
- Baker Hughes reported nat gas rigs fell by 2 to 99 last week.
- Managed money increased net long positions by 21% through Tuesday last week which was highest since October 2021.
WTI Net Length:
