Outlook: Energies are looking for direction today over thin trade ahead of the Holiday weekend. Crude has traded below some key support levels to start off April but has returned above $100 with the rally this week. The market continues to digest estimates of supply disruption against SPR releases and production increases. Despite the bearish dips recently, the market trend appears to remain bullish. Tightening product inventories and a decline in refinery rates last week overshadowed the large build in crude inventories. There’s also a question as to how the market will accept crude builds knowing that it’s funded by the SPR. With OPEC struggling to meet modest production increases and the US failing to increase production at a pace to meet demand, further investment in energy appears to be necessary for a trend reversal in the absence of Russian barrels.
Crude
- The IEA said in their report that OPEC+ provided 10% of their promised supply increases last month.
- The IEA said from May onwards roughly 3 million bpd of Russian oil could be shut-in due to sanctions and voluntarily shunning cargoes.
- Ukraine reported that Russia was increasing military efforts in the South and East regions in an effort to seek full control of Mariupol. It would be the first major Ukrainian city to fall.
- Chinese refiners are on track to decrease crude throughput by 6% in April.
- Kazakhstan sees full Caspian pipeline shipments restored by the end of April.
- The EIA reported a 9.4-million-barrel build in crude stocks for last week.
- Baker Hughes will report their rig count today at 12:00 CST.
- As of 9:35 am CST: Brent crude oil down $0.79 to $107.99, US dollar index up $0.638 to 100.513 while the nearby e-mini S&P 500 futures contract is down 16.50 to 4425.75.
Diesel
- The EIA reports a diesel draw of 2.9 million barrels for last week.
- Distillate stocks have posted their lowest reading since March 2014.
- Diesel stocks are 23.3 million barrels below the 5-year average.
Gasoline
- The EIA reports a gasoline draw of 3.6 million barrels for last week.
- The refinery operating rate fell by 2.5% which will make it more difficult for product production to keep up with demand.
- Gas stocks are 6.6 million barrels below the 5-year average.
Propane
- Conway is trading at $1.3075 and Belvieu is trading at $1.3450.
- Propane stocks rose by 984,000 barrels last week
- Propane inventories sit at 4.2 million barrels and 10% below last year and 18% below the 5-year average.
Natural Gas
- Total US demand rose by 5.4 Bcf/d yesterday to 91.8 Bcf/d.
- Overnight weather runs were relatively flat for the two-week forecast.
- The EIA reported an injection of 15 Bcf for last week.
Oil Demand Forecast: All three agencies have reduced their oil demand forecast for 2022 mostly in reaction to the recent covid wave that has locked down China. Reduced demand estimates can put bearish pressure on the market and currently offset a portion of oil output lost from Russia.
