Outlook: The energy complex has taken a dramatic turn this morning, as crude and products have fallen well below even. May crude oil hit a high of $64.25 per barrel earlier in the session, but has since fallen more than $1.50 per barrel below even. Product markets are experiencing similar weakness with May RBOB down about 5 cents, and front month ULSD down about 4 cents on the day. A multitude of factors are leading to the push lower. The European Medicines Agency stated today that the Johnson & Johnson Covid-19 vaccine has possible links to rare blood clotting disorders. The agency reiterated that the benefits of the vaccine outweigh the very small risk however. Over 7 million people have received the J&J vaccine in the U.S. as of April 7, with just 8 reports of the blood clot issue. The agency reported that there have been no cases of the blood clotting disorder reported in the EU. Discussions between Iran and world powers will continue next week, according to a statement from the European Union. Indirect discussions between Iran and the U.S. have been taking place for a few weeks now. The two countries are aiming to re-establish the 2015 nuclear accord, which would remove sanctions from Iran’s energy sector under the promise the country stops its nuclear program. Weakness in equities is also likely spilling over into the energy complex. All three major equity averages are trading well below even.
Crude
- The World Bank stated this morning that global commodity prices are likely to remain firm near current levels in 2021. They anticipate that crude oil prices will average $56 per barrel this year, before increasing to around $60 per barrel in 2022.
- Today marks the one year anniversary of crude trading below $0 for the first time ever. Crude has rallied more than $100 per barrel since then.
- This afternoon an industry group will release its weekly inventory report. Tomorrow morning the EIA will release its Weekly Petroleum Status Report. The Reuters poll of analysts and traders is predicting that the EIA will report a 2.860 million barrel draw in U.S. crude oil stocks for the week ending April 16.
- Proctor & Gamble announced this morning that they will be raising prices for several products beginning in September due to higher commodity costs. Coca-Cola and Kimberly-Clark have made similar announcements.
- The May crude oil contract is trading $1.45 lower at $61.93. The 20-day and 100-day moving averages are $60.63 and $55.56, respectively. The 14-day RSI is 52.11%.
- As of 10:13 am CST: June Brent is down $1.15 at $65.90, the U.S. dollar index is 0.031 higher at 91.098, while the nearby e-mini S&P 500 futures contract is down 29.50 points at 4,126.50.
Diesel
- The May ULSD contract is trading $0.0342 lower at $1.8583. The 20-day and 100-day moving averages are $1.8194 and $1.6773, respectively. The 14-day RSI is 52.91%.
- Crude oil refineries in India reduced throughput in March by just 1% when compared to the same time period the year prior. Total throughput fell to 4.96 million bpd, according to provisional government data. The small draw in throughput would indicate that refined product demand has reached to near pre-pandemic levels.
- Early estimates from the Reuters poll of analysts and traders are calling for the EIA to report an 898,000 barrel draw in U.S. distillate stocks for the week ending April 16.
Gasoline
- The May RBOB contract is trading $0.0410 lower at $2.0035. The 20-day and 100-day moving averages are $1.9835 and $1.7618, respectively. The 14-day RSI is 51.98%.
- Total plans to restart the gasoline-producing FCC at its refinery in Port Arthur, Texas by Friday, according to Reuters. The FCC was shut down on March 26 due to a malfunction.
- The Reuters poll of analysts and traders is expecting the EIA to report a 650,000 barrel build in U.S. gasoline stocks for the week ending April 16.
Propane
- Propane prices are slightly mixed this morning. At last look, Conway propane was down $0.0075, trading at $0.7025. Mt. Belvieu was flat, trading at $0.7400.
- The NOAA’s 6-10 day and 8-14 day weather forecasts are calling for cooler temperatures for the northern half of the Midwest. Cooler temperatures may provide a small boost for propane demand from a regional perspective, but most of the country will experience average to warmer temperatures, which will likely offset any demand gains experienced due to the cooler weather.
Natural Gas
- The May Natural Gas contract is trading $0.009 lower at $2.740. The 20-day and 100-day moving averages are $2.602 and $2.682, respectively. The 14-day RSI is 59.79%.
- Natural gas futures have slipped slightly this morning. Futures had hit a six-week high on Monday, but forecasts for warmer weather are likely to pressure demand, causing futures values to fall. Record high exports are providing a layer of support, however, as the amount of natural gas moving to export facilities is currently on pace to set an all-time record at 11.1 bcfd.
According to the most recent CDC data, the U.S. is averaging around 3 million Covid-19 vaccinations each day, based on the seven-day average. More than 195 million shots have been given since President Biden’s inauguration day. The Biden administration set a goal of 200 million vaccinations by the first 100 days in office. At the current pace, the country will hit around 230 million doses by the first 100 days in office.
