Morning Highlights
Morning Highlights

3.10.21 The energy complex has been slightly mixed this morning as the market awaits a fresh round of data from the EIA

Ryan Kaup

Mar 10, 2021

Outlook: The energy complex has been slightly mixed this morning as the market awaits a fresh round of data from the EIA. The Weekly Petroleum Status Report will be released this morning at 9:30am CST. Reuters is expecting a small build in crude, and somewhat large draws in refined products. Providing support to the energy complex is the news that the Biden administration is planning to purchase an additional 100 million doses of the Johnson & Johnson Covid-19 vaccine. Johnson & Johnson currently has a deal to provide 100 million doses to the U.S. by the end of June. Government reports have stated that about 3.9 million doses of the single-shot vaccine have already been delivered, and an additional 16 million will be distributed by the end of March. The U.S. House of Representatives is expected to pass the $1.9 trillion coronavirus relief bill later today. Once the resolution is passed by the House, it will be sent to President Biden for approval. Biden is expected to sign the bill before the weekend, as unemployment benefits expire on March 14. Equities are skyrocketing this morning, as all three major averages are trading well above even. The DJIA hit an intra-day record high earlier in the session.

 

Crude

 

  • The Reuters poll of analysts and traders is estimating that the EIA will report an 816,000 barrel build in U.S. crude oil stocks for the week ending March 5. Yesterday afternoon an industry group reported that crude stocks rose 12.80 million barrels.
  • According to an interim economic outlook report from the Organization for Economic Cooperation and Development, the global economy is set to expand 5.6% this year, and 4.0% in 2022. The previous forecast from the group estimated 4.2% global growth this year, and 3.7% next year.
  • The U.S. Department of Labor released its consumer price index for February this morning. The index increased 0.4% last month, and 0.3% in January. Analysts at ING expect larger readings in the latter half of Q2, with the potential to peak around 3.5% and above. ING has forecast that the average inflation rate will reach 2.9% this year and stay at that level next year. Expectations of higher inflation have led to higher bond yields in recent weeks.
  • The April crude oil contract is trading $0.35 lower at $64.36. The 20-day and 100-day moving averages are $61.71 and $49.94, respectively. The 14-day RSI is 65.72%.
  • As of 9:20 am CST: May Brent is up $0.53 at $68.05, the U.S. dollar index is 0.034 lower at 91.124, while the nearby e-mini S&P 500 futures contract is up 33.75 points at 3,906.75

 

Diesel

 

  • The April ULSD contract is trading $0.0036 higher at $1.9106. The 20-day and 100-day moving averages are $1.8456 and $1.5061, respectively. The 14-day RSI is 69.29%.
  • The Reuters poll of analysts and traders is expecting the EIA to report a 3.533 million barrel draw in U.S. distillate stocks for the week ending March 5.
  • Yesterday afternoon an industry group reported that U.S. distillate inventories fell 4.80 million barrels last week.

 

Gasoline

 

  • The April RBOB contract is trading $0.0013 lower at $2.0489. The 20-day and 100-day moving averages are $1.9373 and $1.5530, respectively. The 14-day RSI is 81.72%. An RSI above 70% typically represents an overbought market from a technical perspective.
  • Tesla shares rallied nearly 20% yesterday on positive sales data in China. According to the China Passenger Car Association, electric vehicle sales in the country totaled 97,000 in February, which was more than a sevenfold increase from a year earlier. Tesla sold over 18,000 of the 97,000 reported vehicles. Elon Musk’s net worth rose $25.1 billion in a single day due to the surge in Tesla stock.
  • The Reuters poll of analysts and traders is anticipating that the EIA will report a 3.467 million barrel draw in U.S. gasoline stocks for the week ending March 5.
  • Yesterday afternoon an industry group reported that U.S. gasoline inventories fell 8.50 million barrels last week.

 

Propane

 

  • Propane prices are moving higher this morning. At last look, Conway propane was up $0.0075, trading at $0.8525. Mt Belvieu was up $0.0150, trading at $0.9325.
  • An OPIS survey of analysts and traders is expecting the EIA to report a 1.63 million barrel draw in U.S. propane stocks for the week ending March 5.
  • IHS Markit is anticipating the EIA will report a 357,000 barrel build in propane stocks last week, which is the first projected inventory increase this year.

 

Natural Gas

 

  • The April Natural Gas contract is trading $0.024 lower at $2.638. The 20-day and 100-day moving averages are $2.827 and $2.740, respectively. The 14-day RSI is 38.16%.
  • The Weekly Natural Gas Storage Report from the EIA will be released on Thursday morning at 9:30am CST.

 

 

The 10-year U.S. Treasury yield hit a 13-month high of 1.6% earlier in the week. The yield was around 1% in January. The benchmark yield rate is considered an indicator of investor sentiment on the economy.