Outlook: Energies are looking for direction this morning as they attempt to assess the overall supply outlook with temporary barrels assisting the market in the near term. The US SPR release along with the estimated IEA release will provide around 1.2 million bpd to the market over a 6-month period. However, many estimates regarding Russian supply disruption come in around 2-3 million bpd which still leaves us with a significant deficit. OPEC+ is trying to ramp up production by 400,000 bpd but have seen continued struggles maintaining compliance. A US SPR release of this magnitude would lead us to believe the war and sanctions are here to stay long term. The question will be where we go after the 6-month release ends which will have depleted the US SPR by over 30%. US production increased for the first time in 6 weeks by 100,000 bpd last week but still lags behind the slowly growing rig count. There is a lot of uncertainty in the energy market moving forward and we expect the high volatility to continue.
Crude
- Oil is on track for its largest weekly loss in 2 years.
- The US announced a 180-million-barrel SPR release.
- The SPR will release 1 million bpd for 6 months and will start in May.
- The IEA will meet today to discuss their own round of an SPR release along with the US. Estimates are between 30-50 million barrels.
- OPEC+ moved forward with their 432,000 bpd increase for May.
- OPEC+ states output cut compliance increased in March to 151% from 136% in February.
- OPEC+ increased oil output by 90,000 bpd for the month of March.
- OPEC+ removed the IEA from their panel of trusted sources stating their data has been consistently incorrect.
- Nonfarm payroll was reported at 431,000, coming in below the consensus of 490,000.
- Baker Hughes will report their rig count at 12:00 CST.
- The US added 25 rigs for the month of March.
- As of 8:46 am CST: Brent crude oil down $0.02 to $104.69, US dollar index up $0.319 to 98.631 while the nearby e-mini S&P 500 futures contract is up 8.00 to 4538.00.
Diesel
- China’s 20 biggest airports canceled 68% of flights last week.
- 14% of China’s fuel use is under lockdown threat.
Gasoline
- The Biden Administration said they hope to see gas prices fall between 10-30 cents depending on additional global SPR release figures from the IEA.
- AAA reports the national average retail gas price is $4.215.
Propane
- Conway is trading at $1.3500 and Belvieu is trading at $1.3850, down 4 cents to start the month.
- 45.2% of propane production is exported as of 3/30.
Natural Gas
- Total US demand fell by 3.1 Bcf/d yesterday to 96.1 Bcf/d.
- Overnight weather runs added 4 HDDs from the two-week forecast.
- The EIA reported a build of 26 Bcf for last week.
Daily WTI: Crude is on pace for its largest weekly loss in 2 years. Continued bearish pressure has WTI testing the 50-day moving average and trendline support. A close below these support levels could bring $95 into play.
