Outlook: The energy complex has taken a bit of a breather this morning as crude and products are trading near even. Strong retail sales data for the month of March is providing some support to the complex. According to the Department of Commerce, U.S. retail sales jumped 9.8% higher in March, largely due to the $1.9 trillion stimulus bill and $1,400 direct payments being sent out. Economists had been anticipating a gain of 6.1%. The bar and restaurant sector saw increases of 13.4% compared to the month prior. Positive jobs data reported by the U.S. Department of Labor has also helped provide a layer of support this morning. Rising Covid-19 cases are adding a bit of downside pressure however, as the U.S. is reporting about 71,000 daily new cases. The seven-day average number of cases has risen by about 10% when compared to the week prior, according to the CDC and data from Johns Hopkins University. The CDC is also reporting that the U.S. is averaging 3.3 million daily inoculations. The daily average number of vaccines administered has now been over 3 million for 8 straight days. About 23% of the U.S. population is fully vaccinated, while over 37% have received at least one dose. At this current pace, the Biden Administration’s goal of 200 million doses by 100 days in office will be achieved earlier than expected. Equities have leaped higher this morning after strong earnings were reported from several large companies. The DJIA and the S&P 500 are both at intraday all-time highs, while the Nasdaq Composite has pushed about 1.5% higher as well.
Crude
- First-time claims for unemployment insurance totaled 576,000 for the week ending April 10. That is the lowest total since the early days of the pandemic. Economists polled by Dow Jones anticipated 710,000 first-time claims. Continuing claims held mostly steady around 3.7 million.
- Saudi oil facilities in Jazan were targeted by attacks from Yemen’s Houthi rebels. Saudi officials stated that they intercepted five missiles and four drones. This is the second attack this week, with the other being on Sunday.
- According to a report from Wood Mackenzie, global crude prices could drop to $40 per barrel by 2030 if governments push to hit climate targets that are in line with U.N.-backed plans. The report also states that if world governments act decisively to reduce greenhouse gas emissions, oil consumption would begin a steep decline by as early as 2023. World governments are not on track to hit these aggressive climate goals however.
- The May crude oil contract is trading $0.04 higher at $63.19. The 20-day and 100-day moving averages are $60.36 and $54.97, respectively. The 14-day RSI is 57.79%.
- As of 10:05 am CST: June Brent is up $0.14 at $66.72, the U.S. dollar index is 0.031 lower at 91.662, while the nearby e-mini S&P 500 futures contract is up 36 points at 4,154.00.
Diesel
- The May ULSD contract is trading $0.0004 higher at $1.8904. The 20-day and 100-day moving averages are $1.8088 and $1.6603, respectively. The 14-day RSI is 59.16%.
- Yesterday the EIA reported that U.S. distillate stocks fell 2.081 million barrels in the week ending April 9. Distillate demand saw a nice jump, increasing 464,000 bpd to 4.128 million bpd.
- Midwest distillate inventories are well below the five-year seasonal average. A strong spring planting season is expected, which will prompt heavy demand for diesel fuel. Midwest basis values are likely to push higher as we move into the spring.
Gasoline
- The May RBOB contract is trading $0.0006 lower at $2.0342. The 20-day and 100-day moving averages are $1.9707 and $1.7410, respectively. The 14-day RSI is 58.67%.
- According to the U.S. Department of Transportation, miles traveled on U.S. highways are up when compared to the same week in 2019 for the first time since March 2020. U.S. gasoline demand has found itself well within the five-year seasonal average. As we approach the summer driving season, strong demand is to be expected. Midwest gasoline inventories are well below the seasonal average however, which is likely to cause basis values to increase during the heavy demand periods.
Propane
- Propane prices are slightly mixed this morning. At last look, Conway propane was up $0.0050, trading at $0.7200. Mt. Belvieu was down $0.0075, trading at $0.7800.
- Yesterday the EIA reported that U.S. propane inventories rose 1.016 million barrels, while demand fell 547,000 bpd to 1.112 million bpd. Strong exports helped prevent propane stocks from rising dramatically further, as exports rose 448,000 bpd to 1.161 million bpd.
Natural Gas
- The May Natural Gas contract is trading $0.039 higher at $2.656. The 20-day and 100-day moving averages are $2.577 and $2.678, respectively. The 14-day RSI is 52.41%.
- This morning the EIA released its Weekly Natural Gas Storage Report. They showed that working gas in storage rose 61 Bcf in the week ending April 9. Natural gas stocks are 242 Bcf below last year at this time, and 11 Bcf above the five-year average.
