Outlook: The energy complex has been mixed this morning as crude and products have traded both sides of even. Concerns over the AstraZeneca vaccine and lockdowns in Europe have pressured the complex. Discussions between the U.S. and Iran are also adding in a layer of downside risk. Delegates from the countries in the 2015 nuclear accord are holding discussions this week in Vienna. The negotiations aim to restore the restrictions on Iran’s nuclear activities in exchange for the lifting of U.S. sanctions. According to a Reuters report, the discussions are progressing, but Iranian officials have indicated that disagreements with the U.S. over which sanctions must be lifted still exist. It is unlikely a deal will be reached quickly. Due to the sanctions, Iran is producing about 2.35 million bpd of crude oil. They have the capacity to produce about 4 million bpd. Market participants will be keeping an eye on these negotiations, as Iranian crude production is currently exempt from the OPEC+ agreement. President Biden is scheduled to meet with a bipartisan group of U.S. lawmakers on Monday to discuss the $2.25 trillion infrastructure bill. The Senate parliamentarian stated recently that Democrats in the House and Senate could pass another bill via the budget reconciliation process this fiscal year. President Biden has signaled a willingness to negotiate aspects of the bill, but it's likely if a bill were to pass it would be done so with a simple majority. Equities are having a bit of a mixed session, with the DJIA and S&P 500 trading just above even, while the Nasdaq Composite has traded both sides. The S&P 500 is hovering near its all-time high and is poised to close the week up about 2%.
Crude
- According to U.S. Department of Labor data, the producer price index rose 1% in March. Over the last 12 months, the PPI has risen 4.2%, which is the largest year-on-year increase since September 2011. Economists polled by Reuters anticipated the March PPI to increase by 0.5%.
- The U.S. Army Corps of Engineers is expected to present its recommendations for the Dakota Access pipeline at a federal hearing today. The pipeline moves 570,000 bpd of North Dakota’s crude oil to the Midwest and Gulf Coast. Reuters and Bloomberg are reporting that the Corps is unlikely to recommend an imminent shutdown, but will defer to the court for a decision.
- Today at noon CST Baker Hughes will release its weekly Rig Count Report. Last week they showed that U.S. producers added 13 oil rigs, bringing the total up to 337. Oil rigs are down 225 when compared to last year at this time. Oil rigs hit a low of 172 in August 2020.
- This afternoon the CFTC will release its weekly Commitments of Traders Report. We’ll go into further details with that on Monday.
- The May crude oil contract is trading $0.10 lower at $59.50. The 20-day and 100-day moving averages are $61.09 and $54.20, respectively. The 14-day RSI is 47.27%.
- As of 10:26 am CST: June Brent is up $0.10 at $63.30, the U.S. dollar index is 0.197 higher at 92.254, while the nearby e-mini S&P 500 futures contract is up 5.00 points at 4,094.00.
Diesel
- The May ULSD contract is trading $0.0078 lower at $1.8020. The 20-day and 100-day moving averages are $1.8260 and $1.6374, respectively. The 14-day RSI is 49.14%.
- The current national average retail price for diesel fuel is $3.083 per gallon, according to the most recent data from AAA. Prices one month ago averaged $3.02 per gallon, while prices last year at this time were $2.551 per gallon.
Gasoline
- The May RBOB contract is trading $0.0114 lower at $1.9479. The 20-day and 100-day moving averages are $1.9881 and $1.7132, respectively. The 14-day RSI is 48.48%.
- The current national average retail price for gasoline is $2.867 per gallon. Prices last month averaged $2.796 per gallon, while prices last year at this time averaged $1.895 per gallon.
Propane
- Propane prices are moving lower this morning. At last look, Conway propane was down $0.0050, trading at $0.7700. Mt. Belvieu was down $0.0150, trading at $0.8400.
- The NOAA's 6-10 day and 8-14 day forecast are showing a high probability of cooler than average temperatures for much of the Midwest. Colder weather should provide somewhat of a boost for home heat demand for propane.
Natural Gas
- The May Natural Gas contract is trading $0.020 higher at $2.542. The 20-day and 100-day moving averages are $2.572 and $2.684, respectively. The 14-day RSI is 43.29%.
- Yesterday morning the EIA released its Weekly Natural Gas Storage Report. They showed that working gas in storage rose 20 Bcf in the week ending April 2. Natural gas stocks are 24 Bcf below the five-year average.
More than 66 million people in the U.S. have been fully vaccinated against Covid-19. That represents nearly 20% of the population. According to the most recent CDC data, 112 million people have received at least one dose. The number of doses administered each day is also continuing to steadily rise, with a reported 3.4 million shots given on Thursday. The seven-day average of inoculations sits around 3 million per day, which would signal the Biden Administration will hit its goal of 200 million doses within the first 100 days in office.
