Outlook: The energy complex has been mixed and choppy this morning, as crude and products have traded both sides of even. Wild swings have been experienced this morning. April crude traded as low as $58.94 per barrel before charging back to above $60 per barrel. A similar story can be told for both RBOB and ULSD. April RBOB was down almost 5 cents earlier in the session before pushing closer to even. April ULSD was down almost 3 cents on the day, and is now up about 1.5 cents. Weaker demand in Europe due to a slow rollout of covid-19 vaccines has pressured the complex. France has re-imposed new lockdowns to attempt to slow the spread of the virus. Around 21 million people in 16 areas of France will be placed under lockdown beginning tonight at midnight, as the country has experienced more than 35,000 new cases in the last 24 hours. A “third wave” in France is looking increasingly likely, according to health officials. AstraZeneca shots will resume in Germany, France, Italy, Spain, and several other members of the EU following a new report from the European Medicines Agency. They stated the benefits of the vaccine “continue to outweigh the risk of side effects.” They also stated that the AstraZeneca vaccine is not associated with an increased risk for blood clots. Equities are having a mixed start to the session as well, as the DJIA is down around 300 points, while the Nasdaq Composite trades closer to even. Equities are being pressured due to a decision from the Federal Reserve to not extend a pandemic-era rule that allowed banks to hold less capital against Treasury's and other holdings.
Crude
- Russia’s crude oil exports via the Transneft pipeline system are set to fall by nearly 3% in Q2, according to a report from Reuters. Despite the OPEC+ agreement for April that will allow Russia’s quota to increase, exports are still set to drop.
- Saudi Arabia’s crude oil exports rose for a seventh straight month in January, increasing to the highest level seen since April 2020. Total crude and oil product exports also rose to 7.75 million bpd in January. Due to the voluntary 1.0 million bpd output cut enacted this month, Saudi crude exports are likely to contract for March and April.
- This afternoon Baker Hughes will release its weekly Rig Count Report. Last week they reported that U.S. produces cut 1 oil rig, bringing the total down to 309. Rig counts are still down 390 compared to last year despite producers adding rigs in nearly every week since early September.
- 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 $0.43 higher at $60.43. The 20-day and 100-day moving averages are $63.19 and $51.47, respectively. The 14-day RSI is 46.70%.
- As of 10:27 am CST: May Brent is up $0.38 at $63.66, the U.S. dollar index is 0.181 higher at 92.043, while the nearby e-mini S&P 500 futures contract is down 13.75 points at 3,901.00.
Diesel
- The April ULSD contract is trading $0.0128 higher at $1.7970. The 20-day and 100-day moving averages are $1.8846 and $1.5539, respectively. The 14-day RSI is 45.21%.
- A recovery in airline demand looks to be somewhat underway. According to checkpoint data from the TSA, 1.407 million passengers went through airport security yesterday. That compares with 779,000 on the same day in 2020, and 2.32 million people in 2019.
- According to data from AAA, the national average price for retail diesel fuel is currently $3.107 per gallon. Prices are up about 5 cents per gallon from last week at this time. Prices last year on this day averaged $2.710 per gallon.
Gasoline
- The April RBOB contract is trading $0.0120 lower at $1.9321. The 20-day and 100-day moving averages are $2.0139 and $1.6073, respectively. The 14-day RSI is 47.61%.
- April RBOB futures hit a high of $2.1700 on March 15. Futures have fallen more than 25 cents this week.
- According to data from AAA, the current national average gasoline price is $2.886 per gallon. Prices at the pump have increased about 3 cents in the last week. Last year at this time the national average price was $2.196 per gallon. With the large drop in RBOB futures values, some relief at the pump in the coming days is expected.
Propane
- Propane prices are slightly mixed this morning. At last look, Conway propane was down $0.0050, trading at $0.8175. Mt Belvieu was flat, trading at $0.8800.
- The NOAA’s 6-10 day forecast is calling for colder than average temperatures for most of the western half of the U.S., while the east coast will be much warmer than average. The 8-14 day outlook is looking quite similar. Propane inventories tend to begin building in the spring as demand from home heat use starts to drop. Inventories last week fell slightly while demand increased, according to data from the EIA.
Natural Gas
- The April Natural Gas contract is trading $0.031 higher at $2.512. The 20-day and 100-day moving averages are $2.693 and $2.712, respectively. The 14-day RSI is 36.10%.
- Yesterday morning the EIA reported that U.S. natural gas inventories fell 11 Bcf in the week ending March 12, which was a slightly smaller draw than anticipated. Natural gas inventories are 93 Bcf below the five-year average.
- U.S. natural gas exports are on track to hit a record high in March. The amount of gas flowing to export plants has averaged 10.5 bcfd so far this month, according to data from Reuters. Cheap tanker rates and higher prices in Europe and Asia have provided an incentive for U.S. producers to export more gas.
The benchmark 10-year Treasury yield hit 1.75% yesterday, but has since fallen back slightly. Yields are still around a 14-month high however. Rising bond yields, which can signal fears of inflation, can cause high growth stocks to appear less attractive to investors.
