Outlook: Energies are taking a softer tone this morning with crude and products trading lower across the board. Oversold levels achieved last week could be carrying over to this week to kick things off. Additional fundamental support may be coming from a 6.8% increase in global crude in floating storage. Russia’s Energy Ministry announced a larger-than-expected production cut for March, however previous estimates all projected an actual cut below the pledged 500,000 bpd. Iraq exports through the Turkish Ceyhan terminal are still idle when flows were expected to resume last week. If you take the excess Russian production cut and a delay to Iraq’s exports, the market is seeing ~600,000 bpd of unanticipated oil out of the market today. The market may find a firmer direction later in the week with the EIA, OPEC, and IEA set to release fundamental reports. In addition, US inflation data will be released on Wednesday.
Crude
- Russia’s Energy Ministry announced they reduced oil output by 700,000 bpd in March, over the 500,000 bpd proposed cut.
- Iraq’s norther oil exports to Turkey have yet to resume, despite a deal being signed. Roughly 400,000 bpd of oil flows are sitting idle.
- Global crude in floating storage increased by 6.8% last week.
- US Nonfarm Payrolls for March was reported at 236k vs 240k est. and 326k previous.
- The US inflation report will be released on Wednesday.
- Baker Hughes reported US oil rig counts fell by 2 to 590 last week.
- Last week’s COT report showed WTI managed money participants net length increase by 68k positions.
- OPEC will release its monthly report on Thursday and the IEA on Friday.
- As of 8:08 am CST: Brent crude oil down $0.99 to $84.13, US dollar index up $0.567 to 102.659 while the nearby e-mini S&P 500 futures contract is down 24.25 to 4108.00.
Diesel
- Last week’s COT report showed ULSD managed money traders reduced their net length by 2,750 contracts to a net long 13,049 contracts.
- Seasonally warm temperatures are working through the Midwest this week which could ease delayed planting fears.
Gasoline
- Last week’s COT report showed RBOB managed money traders reduced their net length by 254 contracts to a net long 49,899 contracts.
- RBOB may be finding weakness after trading above its upper Bollinger Band last week.
Propane
- Conway is trading at .8250 while Belvieu is trading at .8425.
- Conway is trading at 42% of crude.
- The US is exporting 54% of production as of 3/31/23.
Natural Gas
- Overnight weather runs added 9 TDDs through the two-week forecast.
- Yesterday, US natural gas demand fell to 100.7 Bcf/d over the weekend.
- The EIA reported a 23 Bcf draw last Thursday.
- Natural gas stocks are 298 Bcf above the 5-year average.
Continuous Daily RBOB: The gasoline market has remained strong through downside moves seen in diesel and crude over the last few months. After a few sessions trading above its upper Bollinger Band, the market may be finding some technical weakness today.
