Bernstein-- - Total Crude stockpiles, including commercial inventories and volumes held in the Strategic Petroleum Reserve, fell last week – that is the 11th consecutive week of falling inventories.
- East Coast Crude stockpiles are the lowest since May 2021.
- Gulf Coast refinery runs fell for the third straight week as we get deeper into the maintenance season.
- Stockpiles at Cushing fell for a second week after 8 consecutive builds to end 2021.
- Crude imports from Mexico surged last week to more than 900k bpd - the highest since July 2020.
- U.S. Crude exports rebounded after falling to a six-month low last week although Gasoline exports were their lowest since June 2020.
- For a second week in a row there were no Crude imports from Russia (coincidental as they are the verge of attacking Ukraine?) or Nigeria.
- Jet Fuel inventories remain near record lows despite a modest build this week. Stockpiles have held below 35M bbls for four straight weeks - the first time they have done so since 1996.
- Net imports of Crude and refined products rose again last week.
- Distillate stockpiles (Heating oil) in the New England region slumped to 6.1M bbls last week, the lowest since July 2019, and the winter has only just started!
- Demand for propane and propylene, on a four-week average, is the highest in a year (winter heating demand).
WTI posted its first loss of the week although the commodity closed essentially flat at $86.90 (-0.07%). It did however trade to the lows of the session at its official close at 2:30 pm just as the broad market sold off (SPX closed at lows of the day -1.1%), and the dollar rallied (DXY +0.3%). It was also the roll of the February to March contract although volatility was rather light on the day. Natural Gas lost more than -5.6% despite another BULLISH storage report versus expectations as the withdrawal was the largest of the winter demand season at -206 bcf, which was the largest weekly withdrawal since last February. The commodity continues its volatility as it closed at $3.81 spot, and was trading at over $4.80 spot just last week. Longer-term forecasts from the NOAA suggesting a warmer than usual February - April may have given short sellers of the commodity some more confidence although tough to be short in February as we often see the worst of the winter season.
We continued to see holders trim across Natural Gas E&Ps although most were fairly patient due to lower prices. Elsewhere among the complex we did see buyers return to oily E&Ps for much of the session, but did have sellers into the close. The Midstream saw some ‘spotty’ sellers, but most were more over the day orders lacking any sense of true conviction. By far the largest tickets on the day were that of the Service names where we saw holders trim on strength in the premarket all the way to the official close of the broad market. Once again, shorts were completely absent across the entire energy complex even as the complex faded all afternoon following the broad market that experienced another ugly close which is making it harder and harder for investor’s to have confidence just 14 days into the trading year (OIH -1.3%, XLE -0.9%, XOP -3.4%, AMZ -0.7%, SPX -1.1%, Nasdaq -1.3%). Earnings should be a tailwind for the overall energy complex as it is expected to be the greatest contributor to the market’s earnings results for the quarter (is it shocking the masses are done sitting at home watching NFLX, and riding their PTON and simply want to live again? as in travel, and be mobile??!!)