Outlook: The energy complex has continued to push higher this morning as crude and products are all trading well above even. Strong demand and the easing of lockdowns in the U.S. and Europe are helping buoy futures values this morning. Members of the European Union will begin to allow foreign travelers who have been vaccinated into the bloc of countries next month. Several U.S. states including New York, New Jersey, and Connecticut are aiming to ease restrictions in the coming months as well. Despite the rosier outlook, rising Covid-19 cases in India will continue to have a dampening effect on the global demand outlook. Confirmed cases in the country have risen to nearly 20 million, and have hit over 300,000 for the 12th consecutive day, according to a report from Reuters. Medical experts believe that case counts in India could be as much as 10 times higher than what is being reported however, as a shortage of testing kits is artificially lowering the confirmed number of cases. This afternoon an industry group will release its weekly inventory report. Tomorrow morning the EIA will release its Weekly Petroleum Status Report. Early industry expectations are calling for a 2.2 million barrel draw in crude oil stocks last week. Product inventories are expected to have fallen last week as well. Equities are off to a rocky start this morning, as all three major averages are trading well below even. The Nasdaq Composite has fallen by about 2.5%, the DJIA is down around 250 points, and the S&P 500 has dropped more than 50 points.
- Saudi Aramco beat analysts forecasts by reporting a 30% rise in first quarter net profit. The strong quarter helped maintain the company’s dividend payout. Net income for Saudi Aramco rose to $21.7 billion for Q1, which was $5 billion greater than Q1 in 2020.
- Next week the New York Stock Exchange will be allowing more members on the floor of the exchange. Members who are fully vaccinated, and firms with 100% of staff that have been vaccinated can begin bringing back all members of the firm to the exchange beginning on Monday.
- Pfizer stated today that the company plans to file for full U.S. approval of its Covid-19 vaccine at the end of the month. If the approval is granted, Pfizer and BioNTech will be able to market the vaccine directly to consumers.
- Before the pause of the Johnson & Johnson Covid-19 vaccine from April 13 to April 23, nearly 20% of unvaccinated people stated in a survey that they preferred the J&J shot. Now that the vaccine has been reintroduced, about 17% of people stated in a CNBC survey that they were waiting to get vaccinated in order to be able to get the J&J vaccine. Around 32% of the U.S. population has been fully vaccinated thus far, according to data from the CDC. With nearly 17% of people waiting for the J&J single-shot vaccine, the number of fully vaccinated people should continue to see a steady rise.
- The June crude oil contract is trading $0.98 higher at $65.47. The 20-day and 100-day moving averages are $62.34 and $57.13, respectively. The 14-day RSI is 61.45%.
- As of 10:25 am CST: July Brent is up $0.82 at $68.38, the U.S. dollar index is 0.427 higher at 91.372, while the nearby e-mini S&P 500 futures contract is down 61.00 at 4,124.75.
Diesel
- The June ULSD contract is trading $0.0389 higher at $1.9908. The 20-day and 100-day moving averages are $1.8835 and $1.7287, respectively. The 14-day RSI is 66.00%.
- According to TSA checkpoint data, over 1.6 million passengers went through U.S. airport security on Sunday. That is the highest number of passengers since March of 2020. Despite the continued rise in air travel, demand is still well below pre-pandemic levels, as 2.512 million passengers were reported on the same day in 2019.
Gasoline
- The May RBOB contract is trading $0.0353 higher at $2.1368. The 20-day and 100-day moving averages are $2.0256 and $1.8196, respectively. The 14-day RSI is 65.95%.
- According to a Bloomberg survey, U.S. gasoline demand is now down just 1% when compared to pre-pandemic levels. As states and cities continue to reopen following the pandemic, summer travel demand is expected to be robust.
Propane
- Propane prices are moving higher this morning. At last look, Conway propane was up $0.0100, trading at $0.7825. Mt. Belvieu was up $0.0175, trading at $0.8200.
- The NOAA is calling for much cooler weather for the northern half of the country in its 6-10 day and 8-14 weather forecasts. Overnight lows here in the Twin Cities are still in the mid-30’s for the next few days, which should help boost demand for propane. Tomorrow morning the EIA will release its Weekly Petroleum Status Report, where we’ll get a fresh look at the export/demand dynamic.
Natural Gas
- The June Natural Gas contract is trading $0.016 lower at $2.950. The 20-day and 100-day moving averages are $2.794 and $2.762, respectively. The 14-day RSI is 62.99%.
- Natural gas futures had hit a 10-week high earlier this morning but values have since fallen slightly. Cooler weather and continued strong exports have helped elevate prices in recent weeks. The amount of natural gas moving to U.S. export facilities is down from the record 11.5 bcfd set in April, but is still near an all-time high.
This morning the U.S. Bureau of Economic Analysis and the U.S. Department of Commerce announced that the U.S. trade deficit hit a record high in March. The imbalance in goods and services with the rest of the world increased to $74.4 billion, which is the highest level ever recorded, and represents a 57.6% increase from the same time period a year ago. The trade imbalance with China increased about 22% to $36.9 billion.
