Outlook: Energies are once again mixed to start today's session with crude and diesel trading lower while gasoline holds small gains. Throughout the week energies have started slow and found strength as the day progresses and we’ll see if that trend continues today. Upside moves are still likely being limited given the macroeconomic uncertainty following yesterday’s rate hike. The Fed signaled that further hikes are not off the table which caused equities to reverse sharply late in the session. The Fed’s dot plot suggests that we are near the terminal rate, but the Fed also said they do not anticipate any rate cuts by the end of the year. The demand growth story continues to grow in the background with reports that Chinese oil demand has risen to 16 mbpd. As the global supply glut diminishes, we may see more focus shifting back toward spare capacity concerns amongst major oil producers.
Crude
- Goldman Sachs said today that Chinese oil demand surpassed 16 mbpd.
- Crude demand in France is currently 840,000 bpd below normal as a result of refinery strikes, according to FGE.
- The Fed increase interest rates yesterday by 25 bps to 5% yesterday.
- The US dollar slid to a seven-week low yesterday.
- The Bank of England increase interest rates by 25 bps today to 4.25%.
- The EIA reported a 1.1 million barrel build in crude stocks last week.
- US crude stocks have risen to a 21-month high.
- As of 8:19 am CST: Brent crude oil down $0.44 to $76.25, US dollar index up $0.050 to 102.396 while the nearby e-mini S&P 500 futures contract is up 20.25 to 3990.00.
Diesel
- The EIA reported a 3.3 million barrel build in diesel stocks for last weeks.
- Diesel demand was up 6.5% w/w.
- A record 2.7 million barrels of Russian diesel is expected to arrive in Brazil this month, purchased at roughly 25 cents below international prices, according to Bloomberg.
Gasoline
- The EIA reported a 6.4 million barrel build in gasoline stocks for last week.
- Gasoline demand was up 4.3% w/w.
- A shutdown of all six refineries in France could result in gasoline production falling by 230,000 bpd and gasoil/diesel falling by 430,000 bpd, according to FGE.
Propane
- Conway is trading at .7200 while Belvieu is trading at .7550.
- Conway is trading at 42% of crude.
- The US is exporting 75% of production as of 3/17/23.
- The EIA reported a 2.2 million barrel build for propane stocks last week.
Natural Gas
- Overnight weather runs added 9 HDDs from the two-week forecast.
- Yesterday, US natural gas demand fell to 98.2 Bcf/d.
- The EIA is expected to announce a 75 Bcf draw on inventories.
Interest Rates: The Fed’s dot plot is what the US central bank uses to signal its outlook for the path of interest rates. Currently, the plot shows the median year-end projection for interest rates to settle in at 5.1% and 4.3% to end 2024.
