Outlook: The energy complex is taking a softer tone to start the week with crude and products down across the board. Headlines this morning are talking about declining diesel demand and how that relates to an economic slowdown. Diesel demand has remained soft amidst economic tightening and is expected to fall further by the end of 2023. A similar situation is being observed in China with trucks on the road declining w/w when expectations are for the opposite. China will report its first-quarter GDP tonight with the trade expecting an increase from 2.9% to 4% for y/y growth. Any surprises revealed for this report could be a trendsetter for the week. The US dollar is also continuing its rebound off 1-year lows last week, which may be providing some mild downward pressure on prices.
- The G7 has decided to maintain its $60 cap on Russian oil. The group considered lowering the cap price when prices fell sharply last month.
- Saudi Arabia’s crude exports fell by 203,000 bpd m/m to 7.455 mbpd in February, according to JODI.
- China will release its first-quarter GDP data tonight.
- May WTI options are set to expire today.
- Baker Hughes reports US oil rigs fell by 2 to 588 last week.
- Money managers raised their net-long positions in WTI to the highest in 5 months.
- WTI’s aggregated open interest has reached its highest level in over a year.
- As of 7:45 am CST: Brent crude oil down $0.47 to $85.84, US dollar index up $0.160 to 101.712 while the nearby e-mini S&P 500 futures contract is up 25.25 to 4164.00.
- Prompt Nymex diesel futures are down over 20% YTD amidst an economic slowdown.
- In China, the number of trucks on the highways fell 8% in the week ending April 9th.
- Money managers have cut their bullish bets on Europe’s diesel futures benchmark to the lowest level in 2 years.
- Last week’s COT report show HO managed money traders added 4,198 contracts and are net long 17,247.
- Gasoline continues to be the more supported market with demand expected to increase heading into driving season while stocks remain at season deficits.
- Last week’s COT report showed managed money traders increased their net long position by 12,668 to 62,567.
- Conway is trading at .8300 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.
- Overnight weather runs added 13 TDDs through the two-week forecast.
- Yesterday, US natural gas demand fell to 101.3 Bcf/d.
- Baker Hughes reported US natural gas rig counts fell by 1 to 157 last week.
Diesel Demand: In the US, trucking has been impacted due to declining factory output, home construction and high retail inventory. Supply chain intelligence firm, FreightWaves, said March trucking volumes have hit their lowest seasonal levels in five years. US demand is expected to fall 2% in 2023.