Morning Highlights
Morning Highlights

4.28.21 The energy market continued its move higher today as demand optimism has offset weakness from Covid surges in Asia and increasing U.S. crude inventories


Katie Murphy

Apr 28, 2021

Outlook: The energy market continued its move higher today as demand optimism has offset weakness from Covid surges in Asia and increasing U.S. crude inventories. The benchmark WTI contract has already managed to see gains of over 1% during the overnight session. Traders seem to be taking OPEC’s decision to continue its plan of easing cuts as a strong sign for global demand recovery. OPEC+ experts had previously reported an expected 6 million bpd increase of oil demand in 2021. Goldman Sachs has reported this morning that it expects the largest jump ever in oil demand over the next six months, forecasting a 5.2 million bpd increase. The bank also expects jet fuel demand to increase by 1.5 million bpd as travel restrictions begin to get lifted. In India cases continue to surge however. The country's case count has climbed by over 300,000 cases per day for over a week while the death toll has surged past 200,000. While there still seems to be demand optimism within the U.S, traders will likely remain cautious as the situation in Asia continues to develop. On the production side of things, we saw a larger than expected build in crude stocks on yesterday’s trusted industry report of 4.32 million barrels. This morning we will now see if these stats are confirmed by the U.S. EIA data due at 9:30 a.m. CT.

Crude

  • Saudi Arabia’s crown prince has announced the possibility of a 1% sale of Saudi Aramco to a leading global energy company. The prince stated that the deal would boost Aramco’s sales in a “major country”.
  • Loadings of Brent crude oil in the British North Sea are expected to stop if no deal is reached between the Unite union and the Shetland Islands Council that employs the workers. Brent crude differentials were seen rising today due to the conflict that could impact production that underpins the Brent futures contract.
  • Goldman Sachs now forecasts that Brent will hit $80 a barrel and WTI will hit $77 a barrel over the next six months.
  • Industry analysts expect the EIA to show a build of 350,000 barrels for U.S. crude inventories on this morning’s Weekly Petroleum Status Report.
  • The June crude oil contract is trading $0.78 higher at $63.72. The 20-day and 100-day moving averages are $61.34 and $56.39, respectively. The 14-day RSI is 57.76%.
  • As of 8:30 am CST: June Brent is up $0.65 at $67.07, the U.S. dollar index is 0.129 higher at 91.038, while the nearby e-mini S&P 500 futures contract is up 3 points at 4,182.

Diesel

  • The May ULSD contract is trading $0.0194 higher at $1.9251. The 20-day and 100-day moving averages are $1.8503 and $1.7072, respectively. The 14-day RSI is 61.86%.
  • The Ukraine economy ministry stated that the country has enough diesel to cover needs for this month but will likely boost imports in May. Traders expect that the country could see supply shortages in May due to planned maintenance at the Belarus Mozyr facility.
  • Industry analysts expect the EIA to show a draw of 600,000 barrels for distillate inventories on this morning’s report.

Gasoline

  • The May RBOB contract is trading $0.0231 higher at $2.0435. The 20-day and 100-day moving averages are $1.9976 and $1.7925, respectively. The 14-day RSI is 58.09%.
  • Industry analysts expect the EIA to show a build of 650,000 barrels for gasoline inventories on this morning’s report.

Propane

  • Propane prices are trading higher again this morning. At last look, Conway propane was up $0.02000, trading at $0.78250. Mt. Belvieu was up $0.01750, trading at $0.81750.

Natural Gas

  • The May Natural Gas contract is trading $0.029 lower at $2.701. The 20-day and 100-day moving averages are $2.732 and $2.745, respectively. The 14-day RSI is 70.41%.
  • Natural gas futures are seen extending their gains this morning as drops in production overpower any weakness from warmer temperatures.

The EIA forecasts that commercial energy use will grow at a slower pace than floorspace due to increasing investments into energy efficiency.

  

As of 8:30 AM CST   WTI MayULSD MayRBOB MayNat Gas May
CONTRACT HIGH71.002.31752.19504.720
RESISTANCE67.981.98682.06223.148
PREVIOUS CLOSE62.941.90572.02042.873
GLOBEX-CURRENT63.721.92512.04352.905
SUPPORT59.001.84001.95212.450
CONTRACT LOW6.500.67240.51891.521