Outlook: Energies are failing to hold the positive momentum from yesterday leaving oil futures on track for their first monthly decline since November. The tariff whipsaw continued yesterday as Trump announced March 4th as the start date for Canada and Mexico. These tariffs, which include oil, were originally delayed by a month and as of Wednesday were said to be delayed until April. The takeaway here should be that these situations are fluid until the minute they go into effect. While tariffs can be inflationary, concerns over economic health appear to be a stronger headwind preventing upside in the energy space. This sentiment is subject to change as economic data rolls out each month. The Fed’s preferred measure of inflation shed little influence today after being report in line with industry expectations. Both PCE and Core PCE did reflect declines in inflation y/y for January.
Crude
- Oil is on track for its first monthly decline since November.
- President Trump announced yesterday that the proposed 25% tariffs against Canada and Mexico will move forward on March 4th. An additional 10% will also be enforced on China. (Reuters)
- China’s crude consumption last year fell by 1.2% y/y according to their National Bureau of Statistics.
- Iraq is expected to announce the resumption of flows through a key pipeline through Turkey which carries 185,000 bpd. (BBG)
- President Trump revoked a license that allowed Chevron to operate in Venezuela. (Reuters)
- Ukrainian President Volodymyr Zelenskiy is expected to sign a deal with the US today that will involve developing minerals, rare earths, oil and gas.
- US PCE, which is the Fed’s preferred measure of inflation, was reported in line with expectations at 2.5% y/y for last month.
- Baker Hughes will report rig counts at 12:00 pm CT today.
- As of 8:54 am CST: Brent crude oil down $0.87 to $73.17, US dollar index up $0.085 to 107.329 while the nearby e-mini S&P 500 futures contract up 4.25 to 5880.00.
Diesel
- Today is LTD for March ULSD futures.
- Singapore middle distillate stocks fell 342,000 barrels to a 4-week low of 9.6 million barrels through Wednesday. (Reuters)
- Group 3 basis has risen over 15 cents since last Friday with current trade around -15.50. (Reuters)
- Chicago basis has driven lower w/w after falling 5.25 to -24.75 yesterday. (Reuters)
Gasoline
- Today is LTD for March RBOB futures.
- Singapore light distillate stocks rose 149,000 barrels to a 21-month high of 16.5 million barrels through Wednesday. (Reuters)
Propane
- Prompt Conway futures are indicated at .9100 while Belvieu is trading at .9250. (CME, OPIS)
- Conway Swap Oct25-Mar26 strip indicative midpoint ~.8200.
- Jun25 propane swap midpoint indication: 77.75
- Conway propane is trading at 55% to WTI.
Natural Gas
- Overnight weather runs removed 5 HDDs through the two-week forecast.
- The EIA reported natural gas stocks fell 261 Bcf last week to 1,840 Bcf.
- Natural gas stocks deficit to the 5-year average rose to 11.5%, which was highest since September 2022.
