Outlook: The energy market is pushing lower to start the week off with fresh economic concerns at the forefront. First Republic Bank was officially shut down over the weekend with JPMorgan winning the bid for acquisition. Fear of further banking turmoil continues to raise concerns about the market's stability amidst economic tightening. The Fed is widely expected to push rates higher on Wednesday by 25 bps, while the June narrative remains more uncertain. In additional bearish news, China’s factory activity unexpectedly contracted in April, stunting the view of economic growth. Demand growth is still expected throughout the year, but the pace and economic signals is keeping upside support grounded. The markets may stay risk-off ahead of the Fed meeting this week, but keep in mind, further downside does bring us into the range that the US has said they’ll purchase oil to refill the SPR.
Crude
- China’s purchasing managers index showed an unexpected contraction in factory activity for April.
- Saudi Aramco is expected to decrease the selling price of its Arab Light crude by 45 cents for June sales to Asia.
- Chevron CEO says Venezuela's oil output could rise to 100,000 bpd this year.
- OPEC+ recent output cut of 1.16 mbpd will begin today.
- US oil rigs were unchanged for last week, according to Baker Hughes.
- Money managers decreased their bullish WTI bets by 19,525 net-long positions to 192,916, which is a 3-week low.
- Global crude in floating storage fell by 7.2% last week, according to Vortexa.
- JPMorgan Chase and Co won the bid to acquire First Republic Bank over the weekend as instability in the banking industry persists.
- The Fed will announce its rate decision on Wednesday, with the expectation for a hike of 25 bps.
- As of 7:47 am CST: Brent crude oil down $1.53 to $78.80, US dollar index up $0.051 to 101.712 while the nearby e-mini S&P 500 futures contract is down 2.25 to 4186.00.
Diesel
- Last week’s COT report showed money managers decreased their bullish Nymex diesel bets by 6,144 to 7,773, which is a 2 year low.
- US renewable diesel consumption hit a record high of 138,000 bpd in February, according to the EIA.
- Biodiesel and renewable diesel demand totaled a record 205,000 bpd, representing 5% of total US distillate consumption.
- India’s diesel sales rose 4.8% m/m in April.
Gasoline
- Last week’s COT report showed money managers decreased their bullish Nymex gasoline bets by 13,003 to 51,966, which is a 3-week low.
- India’s gasoline sales in April fell by 0.5% despite increases observed in diesel.
Propane
- Conway is trading at .7300 while Belvieu is trading at .7600.
- Conway is trading at 40% of crude.
- The US is exporting 56% of production as of 4/21/23.
- OPIS expects propane stocks to increase by 1.2 million barrels last week.
Natural Gas
- Overnight weather runs added 2 TDDs through the two-week forecast.
- Last Friday, US natural gas demand rose fell to 96.4 Bcf/d.
- US natural gas rigs rose by 2 to 161 last week, according to Baker Hughes.
- EU gas storage rose to 59% full last week while Germany, Italy, and Austria are all over 65% full
Continuous Daily RBOB: The prompt RBOB contract is working lower today and is developing a downward trend. Despite a bullish golden cross last week, markets have continued to find weakness on economic concerns and slower Chinese demand recovery. Today the nearby contract is trading below its 100-day moving average and a close below the mark could leave the door open for further downside.
