Outlook: Energies are falling today but are on track for their 4th consecutive monthly gain. Crude is down over 4 dollars today following reports that the US may release 180 million barrels from the SPR over 6 months. The release is a response to rising inflation and supply shortages stemming from the Russia/Ukraine war. OPEC+ met this morning and agreed to move forward with their modest 432,000-barrel production increase for May. The group continues to express concern that short-term excessive supply boosts could have damaging effects on the oil market long term. OPEC has also removed the IEA from its panel of trusted sources criticizing their data for being inaccurate on several occasions. The world continues to scramble to put new oil in the marketplace while Reuters estimates supply disruptions are approaching 5-6 million bpd due to sanctions, conflicts, and infrastructure failures.
Crude
- The OPEC+ monthly meeting was held today.
- OPEC+ will boost production by 432,000 barrels for May.
- OPEC believes the oil market will see a higher-than-expected supply surplus of 1.3 million bpd on average in 2022.
- The US is considering a 1 million bpd release of the SPR with a total of 180 million barrels released in total.
- This would be the largest SPR release in its nearly 50-year history.
- The IEA is scheduled to meet on Friday to discuss their own SPR release among members.
- Chinese manufacturing and nonmanufacturing PMI readings for March are reflecting the effects of the covid lockdown.
- Analysts are predicting between 620,000 – 1.2 million bpd of demand loss if Chinese lockdowns are extended.
- Poland has banned imports of Russian oil.
- The EIA reported a larger than expected draw of 3.4 million barrels for last week.
- As of 8:38 am CST: Brent crude oil down $4.94 to $108.51, US dollar index up $0.476 to 98.278 while the nearby e-mini S&P 500 futures contract is up 14.00 to 4582.00.
Diesel
- The EIA reported a build of 1.4 million barrels while estimates were calling for a 1.6-million-barrel draw.
- Diesel stocks are 30.565 million barrels below last year and 21.745 million below the 5-year average.
Gasoline
- The EIA reported an 800,000-barrel build while estimates were calling for a 1.7-million-barrel draw.
- Gasoline stocks are 474,000 barrels above the 5-year average.
Propane
- Conway is trading at $1.3800 and Belvieu is trading at $1.3975.
- Propane inventories saw a build of 145,000 barrels for last week.
- Propane Exports fell by 59,000 barrels for last week and are exporting 45.2% of production.
Natural Gas
- Total US demand decreased by 8 Bcf/d yesterday to 97.0 Bcf/d.
- Overnight weather runs added 5 HDDs from the two-week forecast.
- The EIA is expected to report a build of 26 Bcf today.
US Strategic Petroleum Reserve: The US is considering a 1 million bpd release of the SPR for 6 months totaling 180 million barrels. This would be the largest draw in the SPR in its history and would set us back to levels last seen in the 80s.
