Outlook: The energy complex has moved higher this morning as crude and products are all trading above even. Prices have found some support this morning after Yemen’s Houthis announced that they had fired 17 drones and two ballistic missiles at targets in Saudi Arabia. The targets were reportedly Saudi Aramco refineries in Jubail and Jeddah. There has been no confirmation from the Saudi’s however. Adding another layer of support to the complex this morning is a statement from Federal Reserve Chairman Jerome Powell. He stated that the central bank remains committed to keeping a loose monetary policy in place and that its “highly unlikely” rates would be raised in 2021. President Biden is scheduled to meet with a group of bipartisan lawmakers today, in what will be an attempt to get both parties on board with his $2.25 trillion infrastructure bill. The lawmakers chosen for the first meeting have a history of working on committees that oversaw infrastructure investments. Funding for the massive bill comes from an increase in the corporate tax rate, which has experienced resistance from both sides thus far. The Senate parliamentarian stated recently that Democrats in the House and Senate could pass another bill via the budget reconciliation process. If a 60 vote majority cannot be reached, it is likely some version of the infrastructure bill will make it through both chambers of Congress with a simple majority. Equities are off to a rocky start, as all three major averages are currently trading below even.
Crude
- The U.S. Army Corps of Engineers stated on Friday that they will allow Energy Transfer LP’s Dakota Access oil pipeline to remain in operation without a federal permit. A key environmental permit was revoked last year. The Corps will defer to the District Court in D.C. for a ruling on whether the pipeline can remain operational long-term.
- According to a report from Reuters, the New York State pension fund is restricting investment in seven different Canadian oil sands companies. The fund will divest about $7 million that is already held in the various companies. The fund’s comptroller stated that the divestment is a result of the companies not having viable plans for a low-carbon future.
- On Friday afternoon the CFTC released its weekly Commitments of Traders Report. They showed that funds and money managers sold 19,547 crude oil contracts, reducing net length to 555,359 lots.
- On Friday Baker Hughes reported that U.S. oil producers kept oil rigs unchanged at 337. Oil rigs were down 167 when compared to the year prior. The oil rig count was at 325 on May 1, 2020, and dropped to as low as 172 on August 14, 2020.
- The May crude oil contract is trading $0.72 higher at $60.04. The 20-day and 100-day moving averages are $60.79 and $54.38, respectively. The 14-day RSI is 48.52%.
- As of 10:31 am CST: June Brent is up $0.55 at $63.50, the U.S. dollar index is 0.085 lower at 92.078, while the nearby e-mini S&P 500 futures contract is down 6.00 points at 4,113.50.
Diesel
- The May ULSD contract is trading $0.0118 higher at $1.8194. The 20-day and 100-day moving averages are $1.8188 and $1.6431, respectively. The 14-day RSI is 50.51%.
- On Friday the CFTC released its weekly Commitments of Traders Report and showed that funds and money managers purchased 1,570 heating oil contracts, increasing net length to 8,397 lots.
- Delta airlines will begin selling flights at 100% capacity beginning on May 1. The major airline had been blocking the sale of middle seats for nearly a year due to the pandemic.
Gasoline
- The May RBOB contract is trading $0.0094 higher at $1.9715. The 20-day and 100-day moving averages are $1.9804 and $1.7201, respectively. The 14-day RSI is 50.75%.
- The CFTC reported in its most recent Commitments of Traders report that funds and money managers purchased 1,451 RBOB contracts in the week ending April 6. Funds are net long 49,107 lots.
- President Biden is meeting today with executives from the auto, tech, biotech, and consumer electronics industries. The discussions will be focused on the semiconductor chip shortage that is causing production issues and delays for a large swath of sectors.
Propane
- Propane prices are moving higher this morning. At last look, Conway propane was up $0.0025, trading at $0.7625. Mt. Belvieu was up $0.0075, trading at $0.8300.
- The NOAA’s 6-10 day and 8-14 day forecast are calling for much cooler weather throughout the Midwest. Below-average temperatures should help boost demand for home heat use. Despite the rosier outlook, we’re approaching the time of year where propane inventories begin to build and put pressure to the downside on hub prices.
Natural Gas
- The May Natural Gas contract is trading $0.027 higher at $2.553. The 20-day and 100-day moving averages are $2.567 and $2.681, respectively. The 14-day RSI is 45.16%.
- The CFTC reported on Friday afternoon that funds and money managers sold 14,475 natural gas contracts in the week ending April 6. Funds are now net short 53,013 lots.
The U.S. reported a single-day record of 4.6 million vaccine doses administered on Saturday, according to the most recent CDC data. The seven-day average number of inoculations has risen to 3.1 million per day. About 36% of the U.S. population has received at least one dose of a Covid-19 vaccine, and about 20% are fully vaccinated.
