Outlook: The energy complex has started the week lower with the benchmark WTI contract falling below $60 this morning. Weakness stems from the OPEC+ decision announced last Thursday that the group would begin to ease output cuts in May. Production cuts will reportedly be eased by 350,000 bpd in May, 350,000 bpd in June, and a further 400,000 bpd in July. A conversation between the Biden Administration and Saudi Arabia had supposedly helped spur this decision as the U.S. administration had requested that energy prices be kept affordable. Saudi Arabia will also be phasing out its own voluntary cuts by July, which will add an extra 1 million bpd to the market. Increased Iranian production being exported to China has also caused weakness in prices after March exports were seen near 1 million bpd. In more supportive news, equities are starting the week higher due to positive macros. On Friday the Labor Department reported that nonfarm payrolls increased by 916,000 in March. Analysts had expected an increase of just 675,000. Payrolls are now seen at their highest level since August and the unemployment rate has fallen to 6%. Traders view this as a strong sign of economic recovery as we see a strong pace for vaccines and the continued lifting of restrictions. Europe on the other hand remains under lockdown as variants continue to pose a threat and vaccine progress lulls. Japan also plans to expand its emergency measures in order to curb the spread of the virus as virus mutations are seen spreading. Overall covid-19 related headlines will remain in the spotlight as traders try and gauge demand recovery as additional production is now expected in the market.
- Indirect talks between the U.S. and Iran are scheduled to take place this week in Vienna. Although Tehran has ruled out direct talks between the two countries, Washington views indirect talks as a healthy step forward as the two countries work towards lifted sanctions and nuclear obligations.
- All ships that were blocked due to the Ever Given being grounded in the Suez Canal had passed through the Canal by this past Saturday.
- Speculators were seen increasing their net long in U.S. crude futures and options by 3,580 contracts last week, with the net long now sitting at 394,040 contracts.
- The U.S. government has given Johnson & Johnson control of the Emergent BioSolutions facility, removing AstraZeneca after the botched covid vaccine issue arose due to having both vaccines in development at the facility.
- The May crude oil contract is trading $1.65 lower at $59.80. The 20-day and 100-day moving averages are $62.22 and $53.54, respectively. The 14-day RSI is 48.01%.
- As of 9:20 am CST: June Brent is down $1.66 at $63.90, the U.S. dollar index is 0.416 lower at 92.606, while the nearby e-mini S&P 500 futures contract is up 47.00 points at 4057.00.
- The May ULSD contract is trading $0.0353 lower at $1.7963. The 20-day and 100-day moving averages are $1.8512 and $1.6169, respectively. The 14-day RSI is 48.46%.
- Leading Republican Senator Roy Blunt has asked that Biden Administration to decease the current $2 trillion infrastructure plan to just $615 billion and focus more on physical infrastructure. Energy Secretary Jennifer Granholm had stated that she hopes the plan passes with bipartisan support, but that they are prepared to move ahead without Republican support if necessary.
- The May RBOB contract is trading $0.0296 lower at $1.9927. The 20-day and 100-day moving averages are $2.0133 and $1.6879, respectively. The 14-day RSI is 53.12%.
- Tesla reportedly delivered a record 184,800 vehicles in the first quarter of 2021, breaking its previous record of 180,570 deliveries seen in the fourth quarter of 2020.
- Propane prices are unchanged this morning. At last look, Conway propane was trading at $0.8500. Mt. Belvieu was trading at $0.9700.
- Current NOAA forecasts are showing above average temperatures for the Midwest and majority of the U.S in both the 6 to 10 day and 8 to 14 day outlooks. Weather looks to be supportive as corn and soybean planting begins across the country, dryness however will remain a concern as drought conditions persist.
- The May Natural Gas contract is trading $0.096 lower at $2.543. The 20-day and 100-day moving averages are $2.613 and $2.697, respectively. The 14-day RSI is 40.37%.
- The Commitment of Traders report released this past Friday showed that natural gas speculators sold 8,509 net contracts last week, leaving their new net long at 195,609.
The EIA reported in its Monthly Energy Review that U.S. energy consumption fell by 7% in 2020 compared to 2019.
|As of 9:20 AM CST||WTI May||ULSD May||RBOB May||Nat Gas May|