Outlook: The energy complex has pushed higher this morning after strong economic data from China was reported. China’s exports rose sharply in March, while imports reached the highest level in four years. Exports soared 30.6% in March when compared to the same period in 2020. Analysts polled by Reuters anticipated a 35.5% jump in exports. Crude oil imports rose 21% in March as well. The data suggests that China’s economy is gaining momentum as it rebounds from the pandemic. Adding a layer of uncertainty to the market this morning comes from the announcement that the U.S. will pause the use of the Johnson & Johnson vaccine. The FDA is asking states to temporarily halt using the J&J vaccine after six people in the U.S. developed a rare blood-clotting disorder, according to a report from CNBC. The halt in the use of the vaccine is out of an abundance of caution, according to the FDA. The CDC and the FDA are holding a press conference this morning to discuss the announcement. Equities have started the day mixed, with the DJIA and the S&P 500 hovering somewhat near even, while the Nasdaq Composite has pushed nearly 1% higher.
Crude
- According to the U.S. Department of Labor, the consumer price index rose 0.6% in March, and 2.6% from last year at this time. Estimates from economists polled by Dow Jones anticipated readings of 0.5% and 2.5%. The year-over-year increase is the highest since August 2018. Gasoline prices were the largest contributing factor for the larger than expected increase, as gas prices rose over 9% in the month.
- OPEC has raised its forecast for world oil demand for 2021. The group predicts that global growth in oil demand will increase by 5.95 million bpd this year. That is up 70,000 bpd from the estimate in March. OPEC cited the pandemic waning in the latter half of this year as the reason for the higher outlook.
- According to the EIA, U.S. oil output from seven major shale formations is expected to rise by 13,000 bpd in May to 7.61 million bpd.
- This afternoon an industry group will release its weekly inventory report. Tomorrow morning the EIA will release its Weekly Petroleum Status Report. Early estimates are calling for the EIA to report a 2.154 million barrel draw in U.S. crude stocks for the week ending April 9.
- The May crude oil contract is trading $0.48 higher at $60.18. The 20-day and 100-day moving averages are $60.51 and $54.56, respectively. The 14-day RSI is 48.83%.
- As of 10:11 am CST: June Brent is up $0.37 at $63.65, the U.S. dollar index is 0.129 lower at 92.009, while the nearby e-mini S&P 500 futures contract is up 3.25 points at 4,123.50.
Diesel
- The May ULSD contract is trading $0.0115 higher at $1.8195. The 20-day and 100-day moving averages are $1.8116 and $1.6483, respectively. The 14-day RSI is 50.06%.
- United Airlines announced this morning that they have partnered with several other companies in what is being called the “Eco-Skies Alliance". The group aims to finance the use of about 3.4 million gallons of low-carbon, sustainable aviation fuel that is derived from trash. United Airlines used 4.3 billion gallons of jet fuel in 2019.
Gasoline
- The May RBOB contract is trading $0.0089 higher at $1.9789. The 20-day and 100-day moving averages are $1.9740 and $1.7267, respectively. The 14-day RSI is 50.99%.
- According to a report from Reuters, President Biden told a bipartisan group of lawmakers on Monday that the White House would be open to the idea of raising the gas tax by 5 cents per gallon to help pay for the infrastructure bill. Biden is also considering instituting a user fee on electric vehicles as they are not subject to a gasoline tax.
Propane
- Propane prices are moving lower this morning. At last look, Conway propane was down $0.0450, trading at $0.7300. Mt. Belvieu was down $0.0550, trading at $0.8000.
- The NOAA’s 6-10 day and 8-14 day weather outlook are calling for lower than average temperatures for much of the country.
- Tomorrow the EIA will release its Weekly Petroleum Status Report. Propane inventories typically start to build around this time of year.
Natural Gas
- The May Natural Gas contract is trading $0.056 higher at $2.617. The 20-day and 100-day moving averages are $2.572 and $2.679, respectively. The 14-day RSI is 50.40%.
- U.S. natural gas futures have risen for a fifth straight day today, as forecasts for cooler weather are expected to boost demand. Strong exports are also providing a boost, as the amount of natural gas moving to export facilities is currently on pace to set an all-time record.
According to the most recent CDC data, the seven-day average number of covid-19 inoculations in the U.S. rose to a record high 3.2 million per day on Monday. Over 20% of the population, or about 74 million people, have been fully vaccinated as well. Despite the vaccination progress, case counts have risen in 27 states, with Michigan leading the way. The seven-day average number of cases has risen 7% when compared to last week.
