Outlook: The energy complex continues to push higher as crude oil has moved over $65 per barrel this morning. Crude has reached as high as $66.23, which is its highest level since April 2019. Yesterday OPEC+ agreed to keep the majority of the output quotas unchanged for April. The group will allow Russia to increase production by 130,000 bpd, while Kazakhstan’s quota will increase 20,000 bpd to meet local demand. Saudi Arabia decided to maintain its voluntary 1.0 million bpd output cut as well. Following the announcement from OPEC+, Goldman Sachs has raised its Brent crude price forecast by $5 to $75 in Q2, and $80 per barrel in Q3. The U.S. Senate is set to debate the $1.9 trillion stimulus bill today. Senators will reconvene with three hours of debate remaining, before then engaging in the “vote-a-rama” that could stretch late into this evening. Senate Majority Leader Chuck Schumer has stated the bill will be passed and sent back to the House for approval. The relief bill is likely to pass both chambers and be signed by President Biden before the March 14 deadline when unemployment benefits expire. Equity markets are having another mixed and choppy session as the 10-Year U.S. Treasury yield continues to pressure markets. The yield increased to 1.62% earlier in the session. All three major averages had been trading both sides of even, but have since dipped further into negative territory.
Crude
- This morning the U.S. Department of Labor reported that nonfarm payrolls increased by 379,000 in February. They also reported that the unemployment rate fell to 6.2%. Economists polled by Dow Jones anticipated 210,000 new jobs and 6.3% unemployment.
- UBS also raised its Brent forecast. The Swiss investment bank predicts that Brent will hit $75 per barrel in the second half of 2021. With consideration of the Brent/WTI spread, that would put WTI at about $72 at that time. Citigroup has stated that Brent crude could hit $70 before the end of the month.
- According to CDC data, nearly 110 million doses of the various Covid-19 vaccines have been distributed in the U.S., and over 82.5 million of those have been administered.
- Today at noon CST Baker Hughes will release its Weekly Rig Count Report. Last week they reported that U.S. producers added 4 oil rigs, bringing the total up to 309.
- This afternoon the CFTC will release its Weekly Commitments of Traders Report. We will go into that data on Monday.
- The April crude oil contract is trading $1.74 higher at $65.57. The 20-day and 100-day moving averages are $60.64 and $49.25, respectively. The 14-day RSI is 72.49%. An RSI above 70% typically represents an overbought market from a technical perspective.
- As of 10:20 am CST: May Brent is up $2.00 at $68.74, the U.S. dollar index is 0.398 higher at 92.029, while the nearby e-mini S&P 500 futures contract is down 13.50 points at 3,752.00
Diesel
- The April ULSD contract is trading $0.0271 higher at $1.9231. The 20-day and 100-day moving averages are $1.8174 and $1.4852, respectively. The 14-day RSI is 74.00%.
- Delta airlines stated yesterday that they planned to spend more than $30 million to offset 13 million metric tons of CO2 emissions in 2020. Delta plans to replace 10% of its jet fuel with sustainable aviation fuel by the end of 2030.
- India’s Minister for Petroleum and Natural Gas, Dharmendra Pradhan, stated that the decision from OPEC+ could threaten India’s economic recovery. India imports around 84% of its crude oil from OPEC members, according to Reuters.
Gasoline
- The April RBOB contract is trading $0.0355 higher at $2.0334. The 20-day and 100-day moving averages are $1.8938 and $1.5301, respectively. The 14-day RSI is 83.28%.
- According to data from AAA, the current national average retail price for gasoline is $2.752 per gallon. Prices have increased about 5 cents in the last week. Last year at this time the average price per gallon was $2.408.
Propane
- Propane prices are moving higher this morning. At last look, Conway propane was up $0.0250, trading at $0.9100. Mt Belvieu was up $0.0075, trading at $0.9800.
- The NOAA’s 6-10 day forecast is calling for some colder temperatures for much of the western half of the country. The 8-14 day outlook is calling for relatively normal temperatures for most of the country. Propane demand saw a nice rebound last week, according to EIA data. That somewhat strong demand combined with low inventory levels could help buoy propane prices.
Natural Gas
- The April Natural Gas contract is trading $0.047 lower at $2.699. The 20-day and 100-day moving averages are $2.855 and $2.747, respectively. The 14-day RSI is 42.31%.
- Yesterday 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 178 Bcf below the five-year average.
