Outlook: The energy market is flat to start the day off with a lack of fresh market news. The IEA did release its monthly supply and demand report today, but with it being the third report this week on the topic following the EIA and OPEC, markets appear to have it priced in. The general growth consensus between all three is that China and non-OECD will be the primary driver for global demand this year. Countries undergoing economic tightening may see demand stunted or lost. With OPEC’s recent production cut, global inventories are expected to tighten further during the second half of the year. The US dollar has rebounded 1-year lows which could be pressuring prices or limiting gains today. Economic reports will be closely tracked before the Fed meets again in two weeks.
Crude
- The IEA sees global oil production falling by 400,000 bpd by year-end, citing a 1 million bpd production increase from non-OPEC+ and a 1.4 million barrel decrease for OPEC+.
- The IEA says global oil demand will rise by 2 million bpd to a record 101.9 mbpd.
- The IEA expects non-OECD countries and China will account for 90% of growth.
- The IEA sees OPEC producing 870,000 bpd below their production cut.
- Nearby WTI has a tightening technical range with Resistance at its 200-day moving average near $83.58 and support at its 9-day moving average near $81.27.
- The US dollar has dipped to 1-year lows but has since bounced off support.
- Baker Hughes will report its rig count at 12:00 CT.
- As of 8:12 am CST: Brent crude oil up $0.07 to $86.16, US dollar index up $0.161 to 101.172 while the nearby e-mini S&P 500 futures contract is down 7.25 to 4165.00.
Diesel
- Chinese March fuel exports rose 60% according to Bloomberg data.
- Group 3 diesel basis has risen by 25 cents this month, currently trading around 30 cents.
- Gasoil stocks at Europe’s ARA hub fell to 1% w/w
Gasoline
- Market analysts suggest Asian refiners will boost gasoline output at the short-term expense of the oversupplied diesel market.
- Gasoline stocks at Europe’s ARA hub were relatively unchanged w/w.
Propane
- Conway is trading at .8350 while Belvieu is trading at .8450.
- Conway is trading at 42% of crude.
- The US is exporting 60% of production as of 4/7/23.
Natural Gas
- Overnight weather runs added 6 TDDs through the two-week forecast.
- Yesterday, US natural gas demand fell to 90.8 Bcf/d.
- The EIA reported an injection of 25 Bcf into storage for last week.
- Total working gas inventories are 33% higher than last year and 18.9% above the 5-year average.
- The Biden Administration approved exports of LNG from the Alaska LNG project. The facility will export primarily to Asia and expects to be operational by 2030.
- The Netherlands plans to increase LNG capacity by 25% to 30 Bcm by 2026. They doubled their import capacity to 24 Bcm last year as they worked away from Russian supply.
Chinese Oil Imports: China’s oil imports are inching back toward pre-pandemic levels. Oil imports rose 16% m/m for March to 12.37 mbpd. Growth is expected to continue with Bloomberg expecting April and May imports to remain strong.
