Morning Highlights
Morning Highlights

3.31.21  The energy complex has been mixed and choppy leading up to the Weekly Petroleum Status Report from the EIA that will be released this morning


Ryan Kaup

Mar 31, 2021

Outlook: The energy complex has been mixed and choppy leading up to the Weekly Petroleum Status Report from the EIA that will be released this morning. The report will be released at 9:30am CST. The OPEC+ Joint Technical Committee met yesterday, where it was reported that the group has lowered its 2021 oil demand growth forecast by 300,000 bpd. The committee cited the recent volatility as a sign that the market remained quite fragile. They also cited refreshed lockdowns as a cause for concern in regard to the demand outlook. The OPEC+ ministers will meet on Thursday to decide on output for May. It is highly anticipated that the group will hold production steady for May. Yesterday it was reported that Saudi Arabia was poised to continue its 1.0 million bpd output cut until at least June. Caution from the group is likely to be exercised going forward. President Biden is expected to announce an ambitious $2 trillion infrastructure bill later today. The legislation is called the American Jobs Plan. The bill includes funding for new schools, rebuilding and repairing roads and bridges, and expanding access to high-speed internet across the country. The bill also has a heavy focus on the transition from traditional energy to green energy. President Biden is introducing the bill in Pittsburgh later today. Equities have bounced higher this morning, as all three major averages are trading above even.

 

Crude

 

  • Private payrolls rose by 517,000 in March, which was the fastest growth rate since September, according to data from ADP. Despite the dramatic increase, performance was just below industry expectations. Economists polled by Dow Jones anticipated an increase of 525,000.
  • Pfizer has reported that its Covid-19 vaccine is 100% effective in children ages 12 to 15. Pfizer has plans to submit the new vaccine data to the FDA as soon as possible, according to CNBC. Children in this age group would likely be eligible for the vaccine before the next school year.
  • The Reuters poll of analysts and traders is estimating that the EIA will report a 107,000 barrel build in U.S. crude oil stocks for the week ending March 26. Yesterday afternoon an industry group reported that U.S. crude stocks rose 3.9 million barrels last week.
  • The May crude oil contract is trading $0.14 higher at $60.69. The 20-day and 100-day moving averages are $62.68 and $53.13, respectively. The 14-day RSI is 48.50%.
  • As of 9:09 am CST: June Brent is down $0.12 at $64.05, the U.S. dollar index is 0.136 lower at 93.161, while the nearby e-mini S&P 500 futures contract is up 18.00 points at 3,965.50.

 

Diesel

 

  • The April ULSD contract is trading $0.0003 higher at $1.7895. The 20-day and 100-day moving averages are $1.8623 and $1.6048, respectively. The 14-day RSI is 46.61%.
  • The Reuters poll of analysts and traders is estimating that the EIA will report a 171,000 barrel build in U.S. distillate stocks for the week ending March 26. Yesterday afternoon an industry group reported that distillate stocks rose 2.9 million barrels last week.
  • China’s Shanghai Futures Exchange stated today that its low-sulphur fuel oil futures contract was being used as a price benchmark for the first time ever in international trade. The futures contract was launched in June 2020 on the INE. The contract was created after the IMO 2020 ruling that prevented ships from using high sulphur fuel oil unless equipped with exhaust scrubbers.

 

Gasoline

 

  • The April RBOB contract is trading $0.0110 higher at $2.000. The 20-day and 100-day moving averages are $2.0190 and $1.6676, respectively. The 14-day RSI is 53.52%.
  • The Reuters poll of analysts and traders is anticipating that the EIA will report a 730,000 barrel build in U.S. gasoline stocks for the week ending March 26. Yesterday afternoon an industry group reported that U.S. gasoline inventories fell 6.0 million barrels last week.

 

Propane

 

  • Propane prices are moving higher this morning. At last look, Conway propane was up $0.0200, trading at $0.8650. Mt. Belvieu was up $0.0275, trading at $0.9300.
  • According to an OPIS survey of analysts and traders, the EIA is likely to report a 253,000 barrel build in U.S. propane stocks for the week ending March 26.
  • The IHS Markit estimate is calling for the EIA to report a 1.572 million barrel build.

 

Natural Gas

 

  • The May Natural Gas contract is trading $0.010 lower at $2.613. The 20-day and 100-day moving averages are $2.629 and $2.701, respectively. The 14-day RSI is 43.07%.
  • Tomorrow morning the EIA will release its Weekly Natural Gas Storage Report.
  • Natural gas futures have slipped slightly this morning, as calls for much warmer weather will likely dampen demand. Record LNG exports are providing a layer of support to the market, however.

 

 

Energy markets will be closed on Friday, April 2 due to the holiday. CHS Energy Hedging will not be staffed on Friday.