Outlook: The energy complex is mixed yet again to start off today’s session. WTI has managed to break out of its recent trade range after aggressively rejecting sub-$80 trade yesterday. The market is digesting US inflation data which should a larger-than-expected drop in headline inflation but an increase in core inflation. The Fed has said they will focus on core inflation data which excludes food and energy, and persistent core inflation could prompt an additional rate hike. Recessionary signals continue to develop with gold's ratio to crude oil on the rise as investors shift to precious metals for protection. The EIA reports may provide some fundamental influence to help the market find conviction today. Projections are mixed for crude but it’s worth noting that SPR releases may have begun last week and will likely be considered in relation to the headline number.
Crude
- WTI rejected sub-$80 trade yesterday and has broke out of its 6-day trading range.
- The EIA forecast crude production at 12.54 mbpd for 2023 and 12.75 mbpd for 2024, up 100,000 bpd from the previous monthly STEO report.
- The EIA lowered its 2023 OPEC+ production forecast by 500,000 bpd and raised Russian production by 300,000 bpd.
- Argus data suggest that Russian Urals at various export points are priced around $55 per barrel, nearing the G7’s imposed price cap of $60.
- The ratio between gold and crude oil has risen to nearly 24 from an average 17, which is a strong indicator that investors are preparing for a recession.
- Reuters estimates US crude stocks fell by 600,000 barrels last week.
- An industry survey yesterday afternoon showed crude stocks rose by 380,000 barrels last week, according to sources citing the API.
- US March CPI declined to 5% vs 5.2% est y/y.
- As of 8:18 am CST: Brent crude oil up $0.58 to $86.19, US dollar index down $0.503 to 101.701 while the nearby e-mini S&P 500 futures contract is up 24.25 to 4160.00.
Diesel
- An industry survey yesterday afternoon showed diesel stocks fell by 2 million barrels last week, according to sources citing the API.
- Reuters estimates diesel stocks fell by 800,000 barrels last week.
- The EIA expects refinery utilization to average 90% in 2023 and 2024.
Gasoline
- US imports of European gasoline fell to their lowest level in 10 weeks at 85,000 bpd and a 57% decline w/w.
- An industry survey yesterday afternoon showed gasoline stocks rose by 450,000 barrels last week, according to sources citing the API.
- Reuters estimates gasoline stocks fell by 1.6 million barrels last week.
Propane
- Conway is trading at .8050 while Belvieu is trading at .8225.
- Conway is trading at 42% of crude.
- The US is exporting 54% of production as of 3/31/23.
- OPIS estimates propane stocks fell by 21,000 barrels last week.
Natural Gas
- Overnight weather runs added 3 TDDs through the two-week forecast.
- Yesterday, US natural gas demand fell to 93.1 Bcf/d.
- The EIA expects US natural gas inventories of 3.8 trilling cubic feet at the end of October, 6% higher than the five-year average.
Continuous Daily WTI: The prompt WTI contract has pushed out of its recent trade range with today’s move higher. Inflation falling more than expected has sent the US dollar lower which is providing support to commodities. A bullish EIA report this morning could push crude near resistance at its 200-day moving average (Red Line).
