Outlook: The energy complex has rebounded this morning, as crude and products are all trading above even. The OPEC+ Joint Technical Committee has kept its growth forecast for global demand for crude oil unchanged despite the rapid expansion in Covid-19 cases in India. The technical committee has predicted that global demand will increase by nearly 6 million bpd in 2021. The OPEC+ Joint Ministerial Monitoring Committee had been scheduled to meet later this week, but a report from Reuters is suggesting that the meeting has been canceled, with the next scheduled meeting moved to early June. OPEC+ will reportedly forego the meeting and stick to the planned production increases that are set to begin in May. The group agreed on April 1 to begin to unwind the output cuts from May to July. Saudi Arabia will also unwind its 1.0 million bpd voluntary output cut. The U.S. Federal Reserve will remain on hold for the rest of the year, according to the latest CNBC Fed Survey. Respondents to the survey predict that the Fed won’t reduce its $120 billion of asset purchases until January. They also believe that the first rate hike won’t happen until December 2022. Equities have had a mixed session thus far, as all three major averages are currently trading just below even. Shares of Tesla have fallen about 4% today, despite the automaker posting a record net income of $438 million in Q1. About one-third of the S&P 500 have reported first quarter earnings. Of those that have reported, 84% have reported higher than expected earnings, according to FactSet.
Crude
- This afternoon an industry group release its weekly inventory report. Tomorrow the EIA will release its Weekly Petroleum Status Report. The Reuters poll of analysts and traders is calling for the EIA to report a 375,000 barrel build in U.S. crude oil stocks for the week ending April 23.
- BP’s profit more than tripled to $2.6 billion in Q1, thanks in large part to higher crude oil prices and higher revenues from natural gas trading. BP has said it will buy back $500 million of shares in Q2, with an additional $1.5 - $2.0 billion in share buy backs expected later in the year. BP has one of the most ambitious climate agendas of any oil major, as the company aims to sell $25 billion in assets by 2025 to help fund the transition to renewables.
- According to the S&P CoreLogic Case-Shiller home price index, home prices rose 12% in February and 11.2% in January when compared to the same time period in 2020. Strong demand and record low supply have helped push home prices higher.
- The June crude oil contract is trading $0.42 higher at $62.33. The 20-day and 100-day moving averages are $61.17 and $56.21, respectively. The 14-day RSI is 54.61%.
- As of 10:09 am CST: June Brent is up $0.44 at $66.09, the U.S. dollar index is 0.081 higher at 90.888, while the nearby e-mini S&P 500 futures contract is down 3.00 at 4,176.50.
Diesel
- The May ULSD contract is trading $0.0137 higher at $1.8922. The 20-day and 100-day moving averages are $1.8413 and $1.7015, respectively. The 14-day RSI is 58.63%.
- The Reuters poll of analysts and traders is calling for the EIA to report a 163,000 barrel draw in U.S. distillate stocks for the week ending April 23.
Gasoline
- The May RBOB contract is trading $0.0196 higher at $1.9982. The 20-day and 100-day moving averages are $1.9926 and $1.7908, respectively. The 14-day RSI is 52.87%.
- The Reuters poll of analysts and traders is calling for the EIA to report a 425,000 barrel build in U.S. gasoline stocks for the week ending April 23.
- According to the EIA, global fuel consumption is expected to increase by about 6% this year when compared to 2020 levels. Strong gasoline demand is expected in the U.S. during the summer driving season. Gasoline demand was at about 9.1 million bpd last week, which is the highest since August 2020.
Propane
- Propane prices are moving higher this morning. At last look, Conway propane was up $0.0200, trading at $0.7600. Mt. Belvieu was up $0.0125, trading at $0.7950.
- The NOAA’s 6-10 day and 8-14 day weather forecast is calling for warmer than average temperatures for much of the country. U.S. propane demand contracted aggressively in the most recent EIA report. Demand is likely to continue to fall as we experience warmer temperatures. Strong exports have more than made up for weak demand, however.
Natural Gas
- The May Natural Gas contract is trading $0.056 higher at $2.846. The 20-day and 100-day moving averages are $2.642 and $2.685, respectively. The 14-day RSI is 66.10%.
- Natural gas futures have hit an eight-week high this morning as strong exports and lower production have helped buoy prices. Colder than normal weather has also helped boost demand. The amount of natural gas moving to U.S. export facilities is on pace to achieve an all-time monthly high.
According to an internal report from OPEC+, the group expects commercial crude oil stocks to reach 2.95 billion barrels in July. If that were to happen, commercial stocks would fall below the 2015-2019 average. The group expects inventories to be about 70 million barrels below the average for the whole of 2021. A previous forecast from the group called for stocks to be about 20 million barrels below average.
