Outlook: Energies are higher today, erasing the losses that were seen yesterday. Reports that Shanghai is loosening lockdowns have halted the downward momentum. OPEC remains bullish for Chinese demand by the end of 2022 but dropped its estimate to a 3.9% growth rate. OPEC reported their members produced an additional 57,000 bpd in March, falling short of their 400,000 bpd target. While OPEC struggles to meet targets, the US hopes to track towards 12 million bpd of production by June with their recent growth to 11.8 million barrels. US rig counts have been steadily increasing but it takes around a year for a newly added rig to begin producing oil which is why we’ve seen US production lag behind. Crude is up 5% today and looks to test $100 where it will find resistance reinforced by the 50-day moving average at $100.39.
Crude
- Shanghai announced it was easing covid lockdowns for the 43% of compounds that had no cases in the past two weeks.
- Despite lockdowns due to covid, China’s oil demand is estimated to grow 3.9% by the end of 2022 according to OPEC.
- OPEC members added 57,000 bpd in March according to their monthly report.
- OPEC lowered Russia’s 2022 oil output by 530,000 bpd.
- India has removed Russian Urals oil from its most recent tender.
- Murphy Oil has begun producing oil from its new Gulf of Mexico project. When fully operational the project will produce 85,000 bpd.
- US oil production is on pace to reach 12 million bpd by June with their recent production level at 11.8 million bpd.
- Texas oil fields will face the worst fire conditions in a decade.
- US inflation reached a 40 year high at 8.5% in March, CPI data today showed.
- Reuters is estimating crude stocks rose by 1.4 million barrels last week.
- The API will report its inventory survey at 3:30 CST.
- As of 8:55 am CST: Brent crude oil up $5.29 to $103.79, US dollar index up $0.007 to 99.934 while the nearby e-mini S&P 500 futures contract is up 46.00 to 4455.00.
Diesel
- Reuters estimates diesel stocks fell by 100,000 barrels last week.
- The net spec and fund long in diesel are likely the smallest since the beginning of the US lockdown in early 2020.
Gasoline
- The White House announced they will allow sales of E15 ethanol-blended gas this summer by providing an RVP waiver.
- Reuters estimates gasoline stocks fell by 900,000 barrels last week.
Propane
- Conway is up 2.5 cents trading at $1.2700 and Belvieu is up 4.5 cents trading at $1.3075.
- Propane continues to track crude fluctuations.
Natural Gas
- Total US demand decreased by 0.3 Bcf/d yesterday to 91.6 Bcf/d.
- Overnight weather runs were relatively flat for the two-week forecast.
- Natural gas continues to set new contract highs throughout the forward curve.
Gas Prices: Gas prices continue to fall with the energy markets seeing a bearish turn. Prices should find additional relief for those that wish to use the cheaper E15 gas which the White House waivered for summer sales. On average the product is 10 cents cheaper and currently offered at 2,300 stations in the country.
