Coquest Daily Energy Report

Crude Oil Futures for January 2023 settled up $0.90 @ $76.09/bbl. trading in a $2.44 range including the overnight-RBOB settled up 4.52/cpg and Heating Oil settled up 0.54/cpg. The Energy Information Administrations domestic refinery utilization outlook is currently forecast to remain near its five-year average through calendar 2023. Expectations are that the combination of a slight contraction in the U.S. economy and refinery maximization of distillate fuel production will reduce distillate prices during first half of 2023. The EIA also currently forecasts that U.S. diesel refining margins will decline by -19.0% in 2023 compared with 2022. However, the EU’s ban on seaborne imports of petroleum products from Russia creates supply and price uncertainty for distillate markets in early 2023.

Natural Gas Futures for January 2023 settled down $0.525 @ $5.326/mmbtu trading in a 0.650 cent range including the overnight session. The Energy Information Administration currently expects natural gas exports to increase in 2023. According to EIA data, U.S. LNG exports peaked in the first half of 2022 as facilities operated close to maximum capacity and Calcasieu Pass came online and steadily increased output during 2022. However, the Freeport fire in June resulted in the shutdown of the facility, removing about -2.0 billion cubic feet per day of U.S. LNG export capacity during 2H22. The Freeport facility recently announced plans to come back online in December and to increase output to about 2.0 bcf/d by January 2023. When Freeport LNG fully resumes normal operations the EIA forecast domestic LNG exports will establish a new record-close to 12.5 bcf/d-some time in March 2023. The EIA expects LNG exports will then reach 12.7 bcf/d by the end of 2023.


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