Outlook: The energy complex has continued to fall this morning, marking the fourth day in a row of losses. Concerns about weaker demand in Europe have put downward pressure on the complex. Several countries in Europe have halted the use of the AstraZeneca vaccine due to concerns about blood clots. The complex is also being pressured due to a report from the International Energy Agency. They stated that oil prices are unlikely to mount a dramatic and sustained comeback. Data from the group suggests that ample inventories and a large amount of spare production capacity will prevent a supercycle event from taking place. Spare capacity from OPEC+ is currently almost 10 million bpd. The Federal Reserve is concluding its two-day policy meeting today, with Chairman Jerome Powell holding a news conference later this afternoon. Inflation concerns have caused Treasury yields to rise dramatically in the last several weeks. Yields were around 1% at the end of January but have risen above 1.6% on the benchmark 10-year note. The yield hit 1.67% earlier in the session, which is the highest level in 13 months. Equities have had a mixed session thus far. The DJIA is currently trading both sides of even, while the Nasdaq Composite and the S&P 500 have fallen into negative territory. Investors will be looking towards the press conference this afternoon for guidance going forward.
Crude
- The Reuters poll of analysts and traders is anticipating that the EIA will report a 2.964 million barrel build in U.S. crude oil stocks for the week ending March 12. Yesterday afternoon an industry group reported that crude oil inventories fell 1.06 million barrels last week, which would be the first crude draw in 4 weeks.
- The IEA lowered its crude oil demand forecast for 2025 by 2.5 million bpd. The group predicts that oil demand will recover to pre-pandemic levels by 2023 however.
- U.S. renewable fuel credits have hit a multi-year high this week. D6 Ethanol RINS have traded as high as $1.43 each, which was the highest since 2013. D4 Biodiesel RINS traded as high as $1.50 each, the highest since 2014.
- The April crude oil contract is trading $0.35 lower at $64.45. The 20-day and 100-day moving averages are $63.14 and $51.09, respectively. The 14-day RSI is 61.30%.
- As of 9:20 am CST: May Brent is down $0.43 at $67.96, the U.S. dollar index is 0.046 higher at 91.911, while the nearby e-mini S&P 500 futures contract is down 14.50 points at 3,948.00.
Diesel
- The April ULSD contract is trading $0.0139 lower at $1.9188. The 20-day and 100-day moving averages are $1.8877 and $1.5424, respectively. The 14-day RSI is 63.41%.
- The Reuters poll of analysts and traders is estimating that the EIA will report a 3.379 million barrel draw in U.S. distillate stocks for the week ending March 12.
- Yesterday afternoon an industry group reported that distillate inventories rose 900,000 barrels last week.
Gasoline
- The April RBOB contract is trading $0.0336 lower at $2.0676. The 20-day and 100-day moving averages are $2.0096 and $1.5941, respectively. The 14-day RSI is 67.51%.
- The Reuters poll of analysts and traders is expecting the EIA to report a 2.996 million barrel draw in U.S. gasoline stocks for the week ending March 12.
- Yesterday afternoon an industry group reported that gasoline inventories fell 930,000 barrels last week.
Propane
- Propane prices are slightly mixed this morning. At last look, Conway propane was even, trading at $0.8500. Mt Belvieu was down $0.0050, trading at $0.9200.
- The OPIS survey of analysts and traders is calling for the EIA to report a 320,000 barrel draw in U.S. propane stocks for the week ending March 12.
- IHS Markit is estimating that the EIA will report a 787,000 barrel build in propane stocks last week.
Natural Gas
- The April Natural Gas contract is trading $0.034 lower at $2.528. The 20-day and 100-day moving averages are $2.742 and $2.721, respectively. The 14-day RSI is 36.74%.
- Tomorrow morning the EIA will release its Weekly Natural Gas Storage Report.
- The Reuters estimate for tomorrow’s EIA report is calling for a 9 Bcf draw in U.S. natural gas inventories for the week ending March 12.
The EIA is expecting Brent crude prices to average $64 per barrel in Q2 of 2021, and then fall to less than $60 per barrel through the end of 2022. Prices in March averaged $63 per barrel.
