Outlook: Energies are mixed this morning again ahead of today’s EIA report that appears to lean bullish according to Reuters and the API. The market continues to see strength as China reenters the market and the US and other wealthy countries have yet to see widespread demand destruction. The US government continues to search for alternative plans to increase oil supply with no signs of a solution. The world is short supply, and each week sees the SPR and other inventory reports move lower. This leads to further support in the market.
Crude
- Chinese demand is picking up and the country is back in the market increasing global demand.
- Sri Lanka cannot raise enough cash to afford even one cargo ship of crude oil or products.
- Several other poorer nations are struggling to find their way in these escalated prices.
- Russian oil producers are starting to use tankers that the rest of the world rejected in an attempt to move enough oil.
- The US is allowing oil executives to communicate with the Maduro regime in Venezuela in order to increase oil production and flow into the US
- Canada proposed an oil pipeline from Alberta into the US that would supply the market with 900,000 bpd.
- The API is predicting a draw of 2.45 million barrels, while the Reuters poll is estimating a 1.4 million barrel increase.
- As of 9:18 am CST: Brent crude oil is up $0.15 to $111.70, the US dollar index down $0.067 to 104.550 while the nearby e-mini S&P 500 futures contract is down 11.25 to 4007.75.
Diesel
- Platts has moved to exclude Russian inventories from the European total. This should bring to light how tight the continent really is.
- The API is estimating a 1.08 million barrel build
- Reuters poll estimates an 800,000 barrel draw.
Gasoline
- US retail sales numbers are not indicating that prices are reducing demand drastically.
- Reuters poll estimates a 1.3 million barrel draw
- The API is estimating a 5.1 million barrel draw
Propane
- Conway is currently $1.2250 and MB is at $1.2450
- Inventories are expected to build 2.3 MMB today.
Natural Gas
- Natural gas continues to be extremely volatile yet overall bullish.
- Excessive heat in the American south and west has increased the need for natural gas to cool homes.
- Reuters poll is predicting an 80-90 bcf build this week.
- Chinese gas and diesel exports were down in the month of April. LNG exports are at 2-year lows
Prices at the Pump: Every state in the country is now seeing the average price at the pump over $4 and rising. The gas market will continue to raise its price until consumers can no longer afford to fill up their tanks and cut down their driving. That number is currently unknown, but as inflation and interest rates hit the wallets of Americans the number gets closer.
