Outlook: The energy complex continues to push higher this morning, as Brent crude has surpassed $60 per barrel for the first time in over a year. A tightening global supply scenario, positive vaccine headlines, and a robust stimulus agenda from the Biden administration have all continued to bring support to the complex. The prospects for Iranian crude oil exports to rapidly return to the market have been dampened as well, as President Biden has said that the U.S. would not lift sanctions in order for Iran to come to the negotiating table. Iran’s Supreme Leader Ayatollah Ali Khamenei has stated that sanctions should be lifted before negotiations could begin. A weak jobs report from the U.S. Department of Labor last week has also boosted investor sentiment that the $1.9 trillion stimulus bill will be passed quickly. Last week the House and Senate passed a budget resolution which started the reconciliation process that would allow the stimulus bill to pass with a simple majority. What was passed by both chambers of Congress on Friday was essentially just a shell bill. What is exactly inside that bill will be what is worked on and discussed over the coming days. The package currently includes $1,400 direct payments to those that qualify, enhanced unemployment, and funding for vaccines and their distribution. Equities have also started the day moving higher, as the all three major averages have hit intraday all-time highs.
Crude
- According to data from Johns Hopkins University, the number of daily new coronavirus cases has dropped below 100,000 for the first time this year. Around 87,000 cases were recorded on Sunday. The last time the daily count was under 100,000 was November 2.
- House Democrats are expected to unveil a plan that would send up to $3,600 per child to families with children under 6 years old. The payments would be distributed monthly. The payments would be temporary relief, but President Biden has called for an expansion of the Child Tax Credit as part of the $1.9 trillion Covid-19 relief package. Speaker of the House Nancy Pelosi has stated that the House will attempt to pass a finalized relief bill within two weeks. Nailing down specifics of the bill is scheduled to start taking place today, according to CNBC.
- On Friday Baker Hughes released its weekly Rig Count Report and showed that U.S. producers added another 4 oil rigs, bringing the total up to 299. The rig count has risen in 19 of the last 20 weeks. Oil rigs are down 377 from last year at this time.
- The CFTC's Commitments of Traders Report was released on Friday afternoon. They showed that funds and money managers sold 4,660 crude oil contracts, reducing net length to 536,642 lots.
- The March crude oil contract is trading $0.91 higher at $57.76. The 20-day and 100-day moving averages are $53.70 and $45.62, respectively. The 14-day RSI is 78.87%. An RSI above 70% indicates an overbought market from a technical perspective.
- As of 10:21 am CST: April Brent is up $0.82 at $60.16, the U.S. dollar index is 0.073 lower at 90.964, while the nearby e-mini S&P 500 futures contract is up 16.25 points at 3,896.50.
Diesel
- The March ULSD contract is trading $0.0254 higher at $1.7391. The 20-day and 100-day moving averages are $1.6269 and $1.3712, respectively. The 14-day RSI is 81.90%.
- The CFTC’s Commitments of Traders Report was released on Friday. They reported that funds and money managers purchased 1,193 Heating Oil contracts, increasing net length to 19,019 lots.
Gasoline
- The March RBOB contract is trading $0.01733 higher at $1.6666. The 20-day and 100-day moving averages are $1.5762 and $1.3083, respectively. The 14-day RSI is 77.77%.
- The CFTC Commitments of Traders Report showed that funds and money managers sold 18,850 RBOB contracts, reducing net length to 69,141 lots.
- Tesla announced in an SEC filing this morning that it had purchased $1.5 billion worth of bitcoin. Tesla also stated that they will begin accepting the cryptocurrency as payment for its various products.
Propane
- Propane prices are moving higher this morning. At last look Conway was up $0.0400, trading at $0.9500. Mt Belvieu was up $0.0050, trading at $0.8900.
- Cold weather throughout much of the country should continue to boost home heat demand for propane. The NOAA 6-10 day forecast is calling for much colder than average temperatures for the majority of the country. The 8-14 day outlook is looking quite similar.
Natural Gas
- The March Natural Gas contract is trading $0.040 higher at $2.903. The 20-day and 100-day moving averages are $2.689 and $2.861, respectively. The 14-day RSI is 59.68%.
- The CFTC Commitments of Traders Report showed that funds and money managers purchased 17,942 Natural Gas contracts, increasing net length to 29,814 lots.
OPEC+ compliance will continue to be something to monitor going forward, but since the historic supply pact was achieved in the spring, compliance has been quite good overall. With monthly OPEC meetings of the Joint Ministerial Monitoring Committee and the Joint Technical Committee, the focus within the group will be for members to continue to hit their supply quota in order to balance the market and boost prices.
