Outlook: The energy complex has been mixed and choppy this morning, as crude and products have traded both sides of even. The complex has pushed further into negative territory however, as some of the risk-premium that elevated WTI to nearly $68 per barrel is being removed from the market. May Brent hit as high as $71.38 per barrel in the overnight session, which is the highest level in more than a year. A Saudi Aramco facility was targeted by a drone strike on Sunday. A Houthi military spokesman has stated that the group has claimed responsibility for the attacks. Saudi Arabia’s Ministry of Energy stated that a petroleum tank farm was targeted, but the strikes were reportedly intercepted, causing no damage to the facility. Over the weekend the U.S. Senate voted along party lines to approve the $1.9 trillion Covid-19 relief bill. The U.S. House of Representatives plans to vote on the Senate legislation on Tuesday. The stimulus package is likely to be passed by the House, where it will then be sent to President Biden for approval. President Biden has stated that the bill will be approved early this week, which will allow the $1,400 direct payments to be sent out this month. Equities have been slightly mixed this morning. Treasury yields continue to climb, which have put pressure on the sector. The benchmark 10-year yield has risen steadily over the last few weeks in anticipation of the stimulus bill being passed by Congress. This morning the yield rose 4 basis points to 1.6%, while it started the year under 1%. The DJIA and the S&P 500 are well above even, while the Nasdaq Composite trades both sides.
Crude
- Over the weekend the U.S. administered a record number of Covid-19 vaccines. According to data from the CDC, 2.9 million doses were administered on Saturday, and 2.4 million on Sunday. The CDC stated that about 1 in 5 adults has received at least one vaccine, while about 1 in 10 have received two doses.
- The White House coronavirus response coordinator, Jeff Zients, told NBC that the U.S. is now averaging over 2 million inoculations per day, compared to about 900,000 during the early days of the vaccination campaign.
- Goldman Sachs has forecast that unemployment could fall to 4.1% by the end of 2021. Analysts at the company have stated that the number could fall even further, and that the U.S. will hit pre-pandemic payroll levels well before the end of 2022. The unemployment rate hit 14.8% in April 2020.
- On Friday Baker Hughes released its Weekly Rig Count Report. They reported that U.S. producers added 1 oil rig, bringing the total up to 310. Oil rigs are still down 372 from last year at this time.
- On Friday afternoon the CFTC released its Weekly Commitments of Traders Report. They showed that funds and money managers purchased 201 crude oil contracts, increasing net length to 559,000 lots.
- The April crude oil contract is trading $0.47 lower at $65.62. The 20-day and 100-day moving averages are $61.09 and $49.50, respectively. The 14-day RSI is 70.06%. An RSI above 70% typically represents an overbought market from a technical perspective.
- As of 10:28 am CST: May Brent is down $0.47 at $68.89, the U.S. dollar index is 0.347 higher at 92.324, while the nearby e-mini S&P 500 futures contract is up 29.50 points at 3,868.50
Diesel
- The April ULSD contract is trading $0.0189 lower at $1.9251. The 20-day and 100-day moving averages are $1.8288 and $1.4925, respectively. The 14-day RSI is 69.78%.
- The CFTC released its Weekly Commitment of Traders Report on Friday afternoon. They showed that funds and money managers purchased 31 heating oil contracts, increasing net length to 4,195 lots.
- The U.S. Department of Agriculture plans to adjust how it reports soybean oil that is used in biofuel in its monthly World Agriculture Supply and Demand Estimates report as early as this spring, according to a report from Reuters. The EIA is also planning to start incorporating renewable diesel data in its monthly Petroleum Supply report.
Gasoline
- The April RBOB contract is trading $0.0106 lower at $2.0541. The 20-day and 100-day moving averages are $1.9104 and $1.5381, respectively. The 14-day RSI is 81.65%.
- The CFTC’s Commitments of Traders Report showed that funds and money managers sold 4,874 RBOB contracts in the week ending March 2. Funds are now net long 42,337 lots.
- According to the latest data from AAA, the current national average retail price for gasoline is $2.774 per gallon. Prices have risen more than 5 cents in the last week. The average price per gallon at this time last year was $2.388.
Propane
- Propane prices are moving lower this morning. At last look, Conway propane was down $0.0150, trading at $0.8800. Mt Belvieu was down $0.0225, trading at $0.9475.
- Colder weather is starting to creep back into the forecast, according to the NOAA. In its 6-10 day and 8-14 forecasts, the NOAA is showing a high probability for cooler than average temperatures for much of the country.
Natural Gas
- The April Natural Gas contract is trading $0.057 lower at $2.644. The 20-day and 100-day moving averages are $2.845 and $2.744, respectively. The 14-day RSI is 38.52%.
- The CFTC’s Commitments of Traders Report showed that funds and money managers sold 10,459 natural gas contracts in the week ending March 2. Funds are net long 17,500 lots.
- Natural gas futures have fallen to a 5-week low this morning even as demand is expected to increase due to cooler weather through mid-March. The U.S. is averaging 91.0 bcfd in natural gas output thus far in March. That compares to 86.5 bcfd in February.
According to data from the Covid Tracking Project, average cases have fallen 12% in the last 14 days. Daily cases in the U.S. are now averaging just over 40,000. The latest CDC data, as mentioned above, also shows that the U.S. is averaging over 2 million inoculations per day. With both Moderna and Pfizer ramping up production this month and expecting to nearly double capacity, it’s likely we’ll see the average number of vaccinations each day continue to rise.
