Outlook: The energy complex has shaken off earlier weakness and has pushed higher. Crude and products are now all trading well above even, with crude up over 1% on the day. Positive demand data in the U.S. has helped buoy futures values today. Valero’s CEO Gary Simmons stated today that gasoline and diesel demand were back to 93% and 100% of pre-pandemic levels. He also stated that the company was quite bullish on gasoline going forward. A very strong summer driving season is expected here in the U.S., as some states are reporting more than half of their citizens have received at least one dose of the Covid-19 vaccine. Improving conditions in Europe are also adding a layer of support. Officials in France stated that schools would reopen on Monday, and travel restrictions would end on May 3. Rapidly rising Covid-19 cases in India and Japan are adding a bit of downside risk however, as India reported nearly 330,000 new cases yesterday. A shortage of testing kits in the country means that number is likely just a fraction of what it truly is, according to a report from NPR. Yesterday it was reported that President Biden was likely to introduce a change to capital gains taxes. The proposal would increase capital gains tax to 39.6% for those that earn more than $1 million per year. The increase would be used to fund the American Families Plan, which is expected to cost around $1 trillion. Equities have shaken off the proposal and pushed higher this morning, as all three major averages are trading well above even.
Crude
- A U.S. Court of Appeals has denied Dakota Access LLC’s petition for the rehearing of a lower court's decision to cancel a key environmental permit for the DAPL pipeline. An environmental review of the pipeline will continue due to the ruling, but it is not expected to be completed until next year.
- OPEC+ is reportedly likely to hold a full ministerial meeting on April 28. The group had been in discussions to hold just the Joint Ministerial Monitoring Committee meeting and forego the meeting of the oil ministers. As policy for the next few months has already been decided, its likely compliance and market fundamentals will be the main topics of discussion.
- Today at noon CST Baker Hughes will release its weekly Rig Count Report. Last week they showed that U.S. producers added 7 oil rigs, bringing the total up to 344. The oil rig count is now down just 94 when compared to the same time in 2020.
- This afternoon the CFTC will release its weekly Commitments of Traders Report. We’ll go into that data on Monday.
- The June crude oil contract is trading $0.72 higher at $62.15. The 20-day and 100-day moving averages are $61.07 and $55.87, respectively. The 14-day RSI is 53.23%.
- As of 10:15 am CST: June Brent is up $0.66 at $66.06, the U.S. dollar index is 0.235 lower at 91.098, while the nearby e-mini S&P 500 futures contract is up 34.25 at 4,162.00.
Diesel
- The May ULSD contract is trading $0.0143 higher at $1.8751. The 20-day and 100-day moving averages are $1.8339 and $1.6915, respectively. The 14-day RSI is 55.75%.
- According to the most recent TSA checkpoint data, U.S. airline travel has stagnated in growth over the past several weeks. Demand when compared to pre-pandemic levels is still down about 40%.
- Oil refineries in India are operating at about 95% capacity, according to a Reuters report. At this time last month, the same refineries were running at 100% capacity. Diesel demand is likely to fall by 220,000 bpd in April, and another 400,000 bpd in May, according to FGE Consulting.
Gasoline
- The May RBOB contract is trading $0.0227 higher at $1.9974. The 20-day and 100-day moving averages are $1.9920 and $1.7790, respectively. The 14-day RSI is 51.38%.
- The combined consumption of diesel and gasoline in April in India is expected to fall by as much as 20%, according to a report from Bloomberg. Renewed lockdowns and rising cases of Covid-19 are likely to pressure demand.
Propane
- Propane prices are moving higher this morning. At last look, Conway propane was up $0.0150, trading at $0.7375. Mt. Belvieu was up $0.0125, trading at $0.7825.
- The EIA showed in the most recent Weekly Petroleum Status Report that U.S. demand for propane has significantly contracted. Despite the massive draw in demand, propane stocks continue to hover near the low-end of the seasonal five-year average due to high exports. It would make sense to look at covering fall propane needs now as low inventories combined with what is expected to be a heavy harvest season are likely to pressure hub values in the fall.
Natural Gas
- The May Natural Gas contract is trading $0.010 higher at $2.759. The 20-day and 100-day moving averages are $2.624 and $2.683, respectively. The 14-day RSI is 59.13%.
- Yesterday 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 12 Bcf above the five-year average.
- Natural gas futures are hovering near seven-week highs today as record exports are buoying futures values. The amount of natural gas moving to export facilities has jumped to 11.5 bcfd so far in April, which would top the record high achieved in March.
According to the most recent CDC data, the U.S. is administering 2.9 million shots per day when based on the seven-day average. The daily average fell below 3 million for the first time in two weeks, as more states have crossed the halfway point for residents with at least one dose. The pause in use of the Johnson & Johnson vaccine is also likely pressuring the daily average lower. About 41% of the population has received at least one dose, with about 27% of the country being fully vaccinated.
