Outlook: Energies are mixed this morning with crude and diesel edging higher while gasoline lags lower. Both WTI and RBOB are on track for a weekly gain, while diesel is looking for a loss of over 5 cents on the week. The banking sector saw a drop in turbulence this week which has eased some of the fears of further collapse under economic tightening. Further economic support was seen from today’s February PCE data showing that inflation declined contrary to expectations for no change. Chinese manufacturing and non-manufacturing sectors continue to show signs of growth which is positive for petroleum demand. Strong Chinese demand growth could act to offset any demand loss observed in countries undergoing economic tightening to fight inflation. OPEC continues to produce under target as of a recent Reuters survey. Spare capacity concerns may resurface if global demand grows as projected and flips the market into a deficit.
Crude
- A Reuters survey suggests OPEC’s oil output fell 70,000 bpd in February.
- At 28.9 mbpd, OPEC is producing 930,000 barrels below their production target.
- The US House of Representatives on Thursday passed a bill intended to bolster US oil and gas production while scaling back climate initiatives. The bill is not expected to pass the Senate.
- OPEC+ is scheduled to meet next week, while no production adjustments are expected.
- A Reuters poll suggests US crude will average $80.88 in 2023, down from $83.94 in the same poll a month ago.
- The NBS Chinese manufacturing and non-manufacturing PMIs came in higher than trade forecasts as a sign of continued growth.
- Baker Hughes will report its rig count at 12:00 CT.
- February Core PCE fell to 4.6% vs 4.7% est.
- Michigan Consumer Sentiment will be reported at 9:00 CT.
- As of 7:54 am CST: Brent crude oil up $0.15 to $79.42, US dollar index up $0.195 to 102.339 while the nearby e-mini S&P 500 futures contract is up 10.25 to 4090.00.
Diesel
- Gasoil stocks at Europe’s ARA hub fell to 2.354 million tonnes from 2.438 million tonnes the week prior.
- AAA reports the national average retail diesel price at $4.228.
- Today is the last trade day for April ULSD.
Gasoline
- Gasoline stocks at Europe’s ARA hub rose to 1.465 million tonnes from 1.442 million tonnes the week prior.
- AAA reports the national average gas price at $3.501, which is an eight-week high.
- Today is the last trade day for April RBOB.
Propane
- Conway is trading at .7750 while Belvieu is trading at .8025.
- Conway is trading at 43% of crude.
- The US is exporting 76% of production as of 3/24/23.
Natural Gas
- Overnight weather runs added 7 TDDs through the two-week forecast.
- Yesterday, US natural gas demand rose to 110.2 Bcf/d.
- The EIA reported a withdrawal of 46 Bcf for last week.
- US natural gas inventories sit 31.3% higher than last year and 21% higher than the 5-year average.
Chinese Oil Demand: Chinese oil demand is expected to accelerate during the remainder of 2023. With reports that demand may have already topped 16 mbpd, the steady growth appears to be on track. China alone is expected to account for over half of global oil demand growth this year. Source: Reuters/IEA
