Outlook: Strong economic data from the U.S. and China has helped push energy futures higher this morning. According to the Institute for Supply Management, U.S. services activity hit a record high in March. The ISM’s non-manufacturing activity index rose to 63.7 last month, which was the highest in the survey’s history. Last week they also reported that the U.S. economy added 916,000 jobs last month, which is the most since August 2020. U.S. economic growth is expected to be the best it has been in nearly four decades, according to Reuters. China’s service-sector gauge has also hit a 3-month high. The Caixin China Services purchasing managers index rose to 54.3 in March. A measure of 50 or greater represents an expanding sector, while a measure below 50 represents a contraction. Adding an additional layer of support this morning is the news that the U.K. is expected to ease more coronavirus restrictions on April 12. With the most recent OPEC+ meeting setting the stage for increased production and the group easing output quotas, focus will now likely shift to negotiations between the U.S. and Iran. The two countries are expected to begin indirect discussions, as the five nations that remain in the 2015 nuclear agreement are meeting in Vienna this week. It is considered unlikely that Iran will re-enter the nuclear accord this year however. Equities are having a mixed session thus far, as the DJIA has traded both sides of even while the Nasdaq Composite and the S&P 500 have held onto moderate gains.
Crude
- The International Monetary Fund has adjusted its global growth forecast for 2021. The IMF expects the world economy to grow by 6% this year, which is an increase from a previous estimate of 5.5% from January. They predict that the U.S. economy will expand 6.4% in 2021.
- President Biden is expected to announce today that states should open Covid-19 vaccine appointments to all adults by April 19. A few weeks prior he stated that all adults should be eligible by May 1. The updated timeline follows along with an increasing number of vaccinations each day. According to the most recent CDC figures, the U.S. is averaging over 3 million inoculations each day.
- Analysts at Goldman Sachs have stated that a recovery in Iranian crude exports is unlikely to shock the energy complex. The U.S. and Iran are attempting to re-enter the 2015 nuclear accord, but by all accounts, reaching a deal prior to the end of 2021 is unlikely. If such a deal were to occur, the Brent crude price forecast from Goldman Sachs would be reduced from $75 per barrel at the end of the year, to $70 per barrel.
- The U.S. oilfield services and equipment sector added around 23,000 jobs last month, according to data from the Bureau of Labor Statistics. Jobs in the sector are still down over 9% from March 2020 however, as over 100,000 jobs were lost due to the pandemic.
- The May crude oil contract is trading $1.80 higher at $60.45. The 20-day and 100-day moving averages are $61.93 and $53.71, respectively. The 14-day RSI is 49.87%.
- As of 10:15 am CST: June Brent is up $1.97 at $64.12, the U.S. dollar index is 0.591 lower at 92.431, while the nearby e-mini S&P 500 futures contract is up 2.50 points at 4,070.25.
Diesel
- The May ULSD contract is trading $0.0441 higher at $1.8165. The 20-day and 100-day moving averages are $1.8454 and $1.6222, respectively. The 14-day RSI is 50.82%.
- Refiners in India have continued to purchase less Saudi crude than in previous months. Indian state refiners will reportedly buy 36% less crude from the Kingdom in May than they did in April. Indian refiners typically buy nearly 15 million barrels of Saudi crude each month, but that number has taken a dramatic hit as Indian officials have blamed the Saudi’s and OPEC+ for driving up crude oil prices as the Indian economy is attempting to recover from the pandemic.
Gasoline
- The May RBOB contract is trading $0.0440 higher at $2.0051. The 20-day and 100-day moving averages are $2.0098 and $1.6947, respectively. The 14-day RSI is 54.26%.
- According to data from AAA, the current national average retail price for gasoline is $2.872 per gallon. Prices last month at this time averaged $2.760 per gallon, while retail prices last year at this time were $1.929 per gallon.
Propane
- Propane prices are mixed this morning. At last look, Conway propane was flat, trading at $0.8200. Mt. Belvieu was up $0.0100, trading at $0.9700.
- The NOAA’s 6-10 day and 8-14 weather outlook are calling for mostly normal temperatures throughout much of the Midwest. Temperatures here in the Twin Cities are expected to drop from recent highs, with temperatures in the low 50’s and high 40’s anticipated next week.
- Propane inventories typically follow a seasonal trend in that they begin to build in the spring as demand starts to fall. We didn’t experience that in last week's EIA report however, as overall inventories fell while demand rose. We will likely see that trend starting back up in tomorrow’s EIA report, as temperatures this past week were well above average.
Natural Gas
- The May Natural Gas contract is trading $0.017 higher at $2.528. The 20-day and 100-day moving averages are $2.602 and $2.694, respectively. The 14-day RSI is 39.21%.
- U.S. natural gas futures values have risen slightly as forecasts for stronger industrial demand have helped boost prices. Record high natural gas exports are also helping buoy prices. The amount of natural gas moving to export facilities has hit 11.4 bcfd so far in April, according to data from Reuters. That tops the all-time high achieved last month of 10.8 bcfd.
