Outlook: The energy complex has taken a bit of a step back this morning as crude and products are trading below even. Crude prices are on track for a nearly 6% gain this week however, as an improved oil demand outlook has helped boost futures prices. Strong economic data from China and the U.S. have also helped buoy prices this week. Yesterday the U.S. Department of Commerce reported a significant jump in U.S. retail sales, rising nearly 10% for the month of March. Economists anticipated a 6.1% increase. Yesterday the U.S. Department of Labor released a much better than expected weekly jobless claims report, with new claims totaling 576,000 for the week ending April 10. Economists polled by Dow Jones expected 710,000 new claims. Vaccine progress in the U.S. has also added in a layer of support, as the pause in Johnson & Johnson inoculations has not slowed the average number of shots being given. Pfizer has recently ramped up production and can deliver 10% more doses to the U.S. than previously expected. Equities are having a somewhat mixed session, as the DJIA and the S&P 500 are trading in positive territory, while the Nasdaq Composite has traded both sides of even. The DJIA pushed over the 34,000 point threshold for the first time ever this morning. The S&P 500 has also hit an intraday all-time high. Stronger than expected earnings from U.S. banks have helped elevate equities this morning.
Crude
- Canadian lawmakers are urging leaders in the U.S. and Canada to help resolve a dispute between Enbridge Inc. and the state of Michigan. Enbridge has been ordered to shutdown a 4-mile portion of the Line 5 oil pipeline that runs under the Straits of Mackinac. The pipeline has the capacity to move about 540,000 bpd.
- Crude oil refineries in China increased throughput by 19.7% in March 2021 when compared to the year prior. Chinese refineries processed about 14.08 million bpd in March. The large jump in throughput is a bullish signal for economic activity in the country.
- Today at noon CST Baker Hughes will release its weekly Rig Count Report. Last week U.S. producers left oil rigs unchanged at 337. Oil rigs were down 167 when compared to the same week in 2020. If oil rigs hold steady, by early May they’ll be over 2020 levels, as the oil rig count fell to 325 on May 1, 2020.
- This afternoon the CFTC will release its weekly Commitments of Traders Report. We’ll go into that data on Monday.
- The May crude oil contract is trading $0.52 lower at $62.94. The 20-day and 100-day moving averages are $60.52 and $55.17, respectively. The 14-day RSI is 56.92%.
- As of 10:13 am CST: June Brent is down $0.30 at $66.64, the U.S. dollar index is 0.127 lower at 91.563, while the nearby e-mini S&P 500 futures contract is up 7.50 points at 4,170.00.
Diesel
- The May ULSD contract is trading $0.0083 lower at $1.8906. The 20-day and 100-day moving averages are $1.8145 and $1.6663, respectively. The 14-day RSI is 58.85%.
- According to TSA checkpoint data, nearly 1.5 million passengers went through U.S. airport security on Thursday. On the same day last year, only 95,000 passengers were reported. Despite the dramatic increase from 2020 levels, air travel demand is still well below the pre-pandemic era, as 2.616 million passengers were reported on the same day in 2019.
Gasoline
- The May RBOB contract is trading $0.0081 lower at $2.0437. The 20-day and 100-day moving averages are $1.9767 and $1.7483, respectively. The 14-day RSI is 59.32%.
- General Motors and LG Chem are planning to invest $2.3 billion into a second U.S. battery cell plant for electric vehicles, according to an announcement from both companies this morning. The plant will be a part of the Ultium Cells LLC joint venture, which will support the production of GM’s Cadillac Lyriq, as well as upcoming EV’s from GM. Construction on the 2.8 million square foot facility will begin immediately, with production scheduled to begin in late 2023.
Propane
- Propane prices are slightly higher this morning. At last look, Conway propane was up $0.0075, trading at $0.7300. Mt. Belvieu was up $0.0050, trading at $0.7825.
- The NOAA’s 6-10 day weather outlook is calling for cooler temperatures throughout much of the country. The 8-14 day outlook shows a return to more normal levels. In the most recent EIA report, propane inventories rose 1.016 million barrels in the week ending April 9. With warmer weather on the horizon, we could finally start to see the normal cycle of propane inventories increasing as demand begins to wane. Strong exports helped offset a significant drop in U.S. demand however, and will be something to continue to monitor going forward.
Natural Gas
- The May Natural Gas contract is trading $0.008 higher at $2.666. The 20-day and 100-day moving averages are $2.586 and $2.679, respectively. The 14-day RSI is 55.08%.
- Yesterday 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 11 Bcf above the five-year average.
The CDC reported that 3.53 million vaccine doses were administered on Thursday. That brings the seven-day average of daily U.S. vaccinations up to 3.3 million. As of yesterday, about 198 million total doses have been administered. The Biden administration’s goal of 200 million doses by the first 100 days in office will likely be achieved today.
