The energy complex is higher this morning after settling at the lowest level yesterday in several weeks. Yesterday’s WTI crude settlement was the lowest since December 10, while distillate and gasoline futures settled at the lowest level since January 9 and December 26, respectively. The strength this morning is due to President Trump’s termination of an oil transaction agreement that was initiated between Venezuelan President Maduro and former President Biden, citing the country failed to meet the “electoral conditions” set by the US and did not take back migrants from the US as quickly as promised. In addition, President Trump revoked a license granted to US oil company Chevron to operate in Venezuela. The news means the company will no longer be able to export Venezuelan crude. If Venezuela’s state oil company exports oil previously exported by Chevron, US refineries will not be able to purchase it due to sanctions. Chevron exports around 240,000 bpd of crude from Venezuela, which accounts for more than 25% of the country’s output.
President Trump also announced the 25% tariffs on Canada and Mexico were being pushed back about a month, and now go into effect on April 2. Additionally, the President discussed the possibility of a 25% tariff on EU imports of cars and other goods, with a target of early April.
Although prices are higher this morning, the prospect of the end of the Russia/Ukraine conflict is capping prices. A resolution would remove risk premium from the market, and potentially lead to the removal of sanctions on Russian energy exports.
Crude
- US crude inventories are about 4% below the five-year seasonal average.
- Canadian crude imports rose to 5.919 million barrels, marking a seasonal high as West Coast refiners boosted intake from the Trans Mountain Pipeline. (GS)
- Prompt crude futures are on track to end the month down by over $3 per barrel, the largest monthly loss since September 2024.
- Kazakhstan is planning to increase crude production by almost 10% this year due to the Tengiz expansion, bringing the country’s total crude output to 96.2 million tons. (BBG)
- The 3:2:1 crack spread of $18.65 is the lowest since January 28.
- As of 9:00 am CST: Brent crude oil is up $0.98 to $73.51, the US dollar index is up 0.721 to 107.050 while the nearby e-mini S&P 500 futures contract is down 30.75 at 5940.00.
Diesel
- Diesel inventory is around 8% below the five-year seasonal average.
- The heat crack spread of $30.07 is trading near the lowest level since February 6.
- Diesel futures are being supported by the 200-day moving average as they traded below intraday yesterday, but settled above that level of support.
Gasoline
- Gasoline inventory is slightly below the five-year seasonal average.
- The gas crack spread at $13.00 is the lowest since January 31
- Gasoline futures are trading well below all major moving averages in oversold territory.
Propane
- Conway is trading at .9200 while Belvieu is trading at .9850.
- Conway Swap Q4-Q1 25/26 strip indicative midpoint ~.8222.
- Conway propane is trading at 55% to WTI the highest level since September 2022.
Natural Gas
- The March 25 NYMEX natural gas futures contract expired yesterday at $3.91/mmbtu, down by 27 cents per mmbtu week-over-week.
- Platts expects the EIA to report a 265 Bcf draw from storage for the week ended February 21. The withdrawal would be larger than this week's 141 Bcf five-year average, and larger than last year’s 86 Bcf draw. (GS)
- Dutch natural gas futures (TTF) are reversing some of this week’s losses and trade up by over 7% this morning alongside positive developments concerning EU Gas storage rules. (GS)
Weekly EIA propane stocks 2025 vs 5-year average: The historically cold January and February led to large propane draws throughout the last two months. The current propane inventory of 51.546 million barrels is ~2.6 million or 5% above the five-year seasonal average.
