02.02.2023 Energy

Feb 02, 2023
February 2, 2023

News items effecting the Energy complex this week are OPEC’S decision to continuing producing crude at the current rate as well as the FED’s raising interest rates another ¼%. When the Government provides fiscal stimulus in the form of cash to American citizen’s inflation is a direct result, inflation puts downward pressure on Energy pricing. Obviously we like cheaper pricing but not inflation, guess we can’t have the best of both worlds! Recently inflation appears to have slowed which if it continues should call for price strength in the Energy market.

In the weekly EIA inventory report we learned crude oil stocks increased by 4.1MB, yet our strategic petroleum reserves are 217MB below last year’s levels (371.6MB vs 589MB). Increased imports and reduced exports caused crude oil stocks to rise.

Diesel stocks increased 2.3MB getting us almost even to last year’s levels at this time (117.6MB vs 122.7MB) higher production levels and lower demand are the main reasons for our increase.
Gasoline found itself increasing stock levels by 2.6MB even though production increased and demand was uncharacteristically up.

Although propane stocks decreased by 2.4MB we are still well above last year’s stock levels (73.2MB vs 49.8MB) the stock decrease was a direct result of  decreased production along with increased demand, both typical for this time of year. 

Patience is key at the moment, typically this time of year is when we see some downside pressure on Energy product pricing. Factoring in interest rates, China’s ongoing covid situation, and the never ending Russia/Ukraine situation no one knows for sure exactly how the markets will play out so be patient!
Bill Pelzel
Energy Manager CRC