Outlook: The energy complex has pushed dramatically higher this morning as Saudi Arabia is considering extending its 1.0 million bpd voluntary output cut by an additional month. Alexander Novak, Russia’s Deputy Prime Minister, reportedly told the broader group to be careful, and “not to destroy the balance in the market.” The OPEC+ oil ministers are meeting today. Many industry participants expected OPEC+ to increase production by 500,000 bpd in April, and for the Saudi’s to remove their 1.0 million bpd voluntary cut, effectively increasing output from the group by 1.5 million bpd. But members of the group have stated that although they see a lot of positives in the market, the demand recovery remains fragile. Market participants will eagerly await a final decision from OPEC+, which should happen sometime later today. The U.S. Senate is expected to begin voting on the $1.9 trillion stimulus bill today. The Senate is expected to move into what’s typically known as a “vote-a-rama”, which involves a large number of votes on amendments that can often take several hours. Senate Majority Leader Chuck Schumer has stated that he believes he has the votes to pass the bill, however, with the changes made it will need to be sent back to the House for approval before being sent to the President. Schumer has stated that the Senate will pass the bill and get it signed by President Biden before the March 14 deadline when unemployment benefits expire. Equities have been mixed and choppy this morning. Despite a slighter better than expected unemployment report from the U.S. Department of Labor, all three major averages have traded both sides of even.
Crude
- This morning the U.S. Department of Labor reported that first-time claims for unemployment benefits totaled 745,000 last week. Economists surveyed by Down Jones anticipated 750,000 new claims. The report from a week prior was revised to 736,000, indicating a slight increase in first-time claims. Continuing claims, which are those that have filed for at least two weeks straight, fell to 4.3 million.
- Providing some risk premium to the market this morning is the news that Yemen’s Houthi forces have stated that they had fired a missile at a Saudi Aramco facility in the city of Jeddah. There has been no confirmation from Saudi authorities however. Most of Saudi Aramco’s facilities are in the Eastern Province, which is over 600 miles from Jeddah.
- Yesterday the EIA reported that U.S. crude oil stocks rose by 21.6 million barrels last week, which was an all-time high.
- The EIA reported recently that the U.S. installed a record amount of wind turbine capacity in 2020. They also reported that in 2019 and 2020, U.S. developers installed more wind power capacity than any other generating technology.
- The April crude oil contract is trading $3.08 higher at $64.36. The 20-day and 100-day moving averages are $60.11 and $49.00, respectively. The 14-day RSI is 66.57%.
- As of 10:06 am CST: May Brent is up $3.05 at $67.12, the U.S. dollar index is 0.176 higher at 91.123, while the nearby e-mini S&P 500 futures contract is up 1.75 points at 3,818.50
Diesel
- The April ULSD contract is trading $0.0643 higher at $1.9000. The 20-day and 100-day moving averages are $1.8053 and $1.4783, respectively. The 14-day RSI is 70.66%. An RSI above 70% typically represents an overbought market from a technical perspective.
- Yesterday the EIA reported that U.S. distillate inventories fell 9.718 million barrels last week. They also reported that U.S. distillate demand fell 144,000 bpd to 3.788 million bpd.
Gasoline
- The April RBOB contract is trading $0.0481 higher at $1.9999. The 20-day and 100-day moving averages are $1.8794 and $1.5230, respectively. The 14-day RSI is 80.91%.
- General Motors is looking into opening its second U.S. battery factory, according to a report from the WSJ. The second factory would be in partnership with LG Chem. The two companies are already building a $2.3 billion facility in Ohio, with this second factory being of similar size and scope. GM plans to exclusively sell all electric vehicles by 2035.
- Yesterday the EIA reported that U.S. gasoline inventories fell 13.62 million barrels last week, which was the largest decline since 1990.
Propane
- Propane prices are moving higher this morning. At last look, Conway propane was up $0.0050, trading at $0.8900. Mt Belvieu was up $0.0100, trading at $0.9750.
- Yesterday morning the EIA reported that U.S. propane inventories fell 2.245 million barrels last week. Propane demand saw a nice rebound, increasing 536,000 bpd to 1.487 million bpd. Exports of propane also fell 574,000 bpd, which when combined with the higher demand lead to the large draw in stocks.
Natural Gas
- The April Natural Gas contract is trading $0.058 lower at $2.758. The 20-day and 100-day moving averages are $2.865 and $2.749, respectively. The 14-day RSI is 45.53%.
- This morning the EIA released its Weekly Natural Gas Storage Report. They showed that working gas in storage fell 98 Bcf in the week ending February 26. Natural gas inventories are 277 Bcf lower than last year at this time, and 178 Bcf below the five-year average.
