Outlook: The energy complex has been slightly mixed and choppy as crude and products have traded both sides of even. A rapidly deteriorating situation in India is giving the market some pause, as Covid-19 cases in the country have exploded. India reported 314,835 new Covid-19 cases today, which is the highest daily increase in cases worldwide since the pandemic began. India also reported 2,104 deaths caused by the virus. New lockdowns in the country are being instituted today that will limit travel for only essential services. The outbreak in India is expected to take a bite out of global crude oil demand. According to a Bloomberg report, India’s surge in cases will reduce global oil demand by 550,000 bpd. Yesterday President Biden announced that the administration had reached its goal of 200 million vaccinations in the first 100 days in office. According to the most recent CDC data, the U.S. is averaging about 3 million vaccinations each day based on the seven-day average. Despite a better than anticipated unemployment report, equities are off to a bit of a mixed session as all three major averages are hovering near even. Analysts at Barclays have raised their year-end S&P 500 target to 4,400, which would be about a 6% gain from where it is currently at.
Crude
- The U.S. Department of Labor reported this morning that first time claims for unemployment insurance totaled 547,000 last week. That represents a pandemic low. Economists polled by Dow Jones anticipated 603,000 first time claims. Continuing claims, which are those that have filed for at least two weeks in a row, fell by 34,000 to 3.67 million.
- The Biden administration announced today that the U.S. would push to cut greenhouse gas emissions in half by 2030. The goal would cut emissions by 50%-52% from 2005 levels. The target nearly doubles the previous pledge from former President Obama, who pushed for a 26%-28% cut below 2005 levels. The announcement was made at a climate summit attended by 40 world leaders, which included China, Russia, and India.
- Despite the rapid increase in Covid-19 cases in India, Indian Oil Corp Ltd’s refineries are operating at nearly 95% capacity. That is down from 100% when compared to the same time period last month.
- Crude oil output in Libya has fallen by about 300,000 bpd, according to a Reuters report. Due to budgetary issues, production has fallen from 1.3 million bpd to 1.0 million bpd, and could fall further, according to Libya’s National Oil Corporation. The NOC declared force majeure on exports from the Hariga oil terminal earlier this week due to a budget dispute with the central bank.
- The June crude oil contract is trading $0.18 higher at $61.53. The 20-day and 100-day moving averages are $60.90 and $55.571, respectively. The 14-day RSI is 50.76%.
- As of 10:25 am CST: June Brent is up $0.34 at $65.66, the U.S. dollar index is 0.101 higher at 91.256, while the nearby e-mini S&P 500 futures contract is even at 4,164.75.
Diesel
- The May ULSD contract is trading $0.0079 higher at $1.8616. The 20-day and 100-day moving averages are $1.8277 and $1.6868, respectively. The 14-day RSI is 53.75%.
- American Airlines and Southwest Airlines have both reported an uptick in airline travel demand. Both carriers plan to increase the number of flights available during the spring and summer months. Despite the increase, demand is still well below pre-pandemic levels, as American is planning on offering about 20%-25% less flights than during the same period in 2019.
Gasoline
- The May RBOB contract is trading $0.0022 higher at $1.9856. The 20-day and 100-day moving averages are $1.9886 and $1.7734, respectively. The 14-day RSI is 49.57%.
- Gasoline sales in India are expected to contract by 100,000 bpd in April, and about 170,000 bpd in May if further lockdown measures are instituted, according to analysis from FGE.
Propane
- Propane prices are moving higher this morning. At last look, Conway propane was up $0.0150, trading at $0.7250. Mt. Belvieu was up $0.0250, trading at $0.7700.
- Yesterday the EIA reported that U.S. propane inventories fell 72,000 barrels in the week ending April 16. U.S. demand plummeted, falling 433,000 bpd to 679,000 bpd. Strong exports more than offset the weakening demand however, as exports rose 537,000 bpd to 1.698 million bpd. This will be an interesting dynamic to keep track of. We’ve previously stated that strong exports could limit the seasonal trend of propane inventories rising in the spring and summer, which so far has mostly held true. If propane inventories remain low, hub values in the fall are likely to push higher. Looking at getting fall propane needs covered now would be advantageous.
Natural Gas
- The May Natural Gas contract is trading $0.067 higher at $2.759. The 20-day and 100-day moving averages are $2.618 and $2.682, respectively. The 14-day RSI is 60.08%.
- This morning the EIA released its Weekly Natural Gas Storage Report. They showed that working gas in storage rose 38 Bcf in the week ending April 16. Natural gas stocks are 251 Bcf less than last year at this time, and 12 Bcf above the five-year average.
