Outlook: Energies are moving higher this morning on pace to post a weekly gain. Crude has seen a relatively quiet week in comparison to what we’ve seen over the last couple of months. Progress with an oil Embargo of Russian oil and Chinese lockdowns remained relatively unchanged. Along with the weekly gain, oil will look to post its longest stretch of monthly gains since early 2018. The May contract for gas and diesel is set to expire today with both currently trading lower. Diesel has set new contract highs this week and we are seeing an inverse of 95 cents from May to June. There is a high level of uncertainty on how June will transition into the prompt contract. It will be worth keeping an eye on price movements as we approach the 1:30 CST settle. OPEC+ is scheduled to meet next week on May 5th. OPEC members continue to see supply disruptions with both Libya and Kazakhstan experiencing outages in April. With the market volatility and uncertainty, we recommend keeping a tight DPR to eliminate unnecessary exposure and reduce risk.
Crude
- Oil is on track for its fifth consecutive monthly gain.
- Chinese lockdowns remain steady.
- Germany has stated it would not block an EU oil embargo but expressed skepticism regarding whether it’s the most effective means of damaging Russia.
- OPEC+ is expected to maintain its production increase of 432,000 bpd for June. They will meet next week on May 5th.
- Russia has offered India a dual-payment mechanism to allow more trade in local currencies.
- Kazakhstan produced 175,000 bpd less oil in April due to weather-related outages according to a Bloomberg estimate.
- Baker Hughes will report their rig count at 12:00 CST.
- As of 8:55 am CST: Brent crude oil up $2.16 to $109.75, US dollar index down $0.345 to 103.278 while the nearby e-mini S&P 500 futures contract is down 35.75 to 4298.00.
Diesel
- Today is the last trade day for the May ULSD contract.
- Diesel inventories remain at their lowest levels since 2008.
- AAA reports the national average diesel price at $5.18 setting a new record price level.
Gasoline
- Today is the last trade day for the May RBOB contract.
- AAA reports the national average gas price at $4.159
Propane
- Conway is trading at $1.2550 and Belvieu is trading at $1.3100.
- The EIA reported a 2.2 million barrel build in propane stocks for last week.
- The US is currently exporting 56.5% of production.
Natural Gas
- Total US demand fell by 0.7 Bcf/d yesterday to 94.9 Bcf/d.
- Overnight weather runs were unchanged for the two-week forecast.
- The EIA reported a natural gas build of 40 Bcf.
Monthly WTI: Oil is on track for its 5th consecutive monthly gain. While we’ve seen more convincing downward moves this month, the trend remains bullish. Tightening inventories should allow prices to inch higher when the headlines go quiet.
