Outlook: The energy complex is taking a breather today bringing a halt to the sharp selloff this week. With the market remaining oversold across the board, and a lack a buying interest yet to come through, further downside could be in the cards here. There appears to be a fundamental disconnect between what’s current and the fear of what may be ahead. As it sits today, petroleum demand remains ahead of last year. Recessionary demand destruction does not appear to be significant to the level that it should control the market. Diesel demand is lagging, and that’s significant, but today it feels overdone relative to the price action. Fear is in the driver's seat and right now the fear of a hard landing and a recession is overshadowing any optimism to bring back buying. Look for nonfarm payroll data tomorrow to influence how we head into the weekend.
Crude
- Russian Prime Minister Novak reaffirmed the country’s commitment to reducing crude output by 500,000 barrels. He said increasing waterborne shipments doesn’t reflect the decline in pipeline flows.
- A drone attack hit one of Russia’s southern oil refineries last night however no significant disruption occurred.
- OPEC+ is preparing for an in-person meeting at its Vienna headquarters next month.
- The prompt WTI contract posted a low of $63.64 overnight.
- The prompt WTI contract closed below its lower Bollinger band yesterday.
- The EIA reported crude stocks fell by 1.2 million barrels last week.
- US crude production rose 100,000 bpd to 12.3 million bpd.
- The ECB raised interest rates by 25 bps to 3.75% today.
- The Fed increased interest rates by 25 bps yesterday to 5.25%.
- As of 8:47 am CST: Brent crude oil up $0.26 to $72.54, US dollar index up $0.011 to 101.354 while the nearby e-mini S&P 500 futures contract is down 32.25 to 4075.00.
Diesel
- The EIA reported diesel stocks fell by 1.1 million barrels last week.
- Diesel demand rose 3.9% w/w to 3.8 mbpd.
- Russia’s shipments of diesel-type fuel out of the Baltic fell by 435,000 bpd in April.
- The prompt diesel contract remains in oversold territory.
Gasoline
- The EIA reported gasoline stocks rose by 1.7 million barrels last week.
- Gasoline demand fell by 9.4% w/w to 8.6 mbpd.
- Commercial players, including refiners, have increased their short positions in gasoline to around 200,000 contracts, which is 20,000 contracts higher than the second half of last year.
- The prompt gasoline contract remains in oversold territory.
Propane
- Conway is trading at .6525 while Belvieu is trading at .6525.
- Conway is trading at 39% of crude.
- The US is exporting 62% of production as of 4/28/23.
- The EIA reported a surprise draw of 600,000 barrels for propane stocks last week.
Natural Gas
- Overnight weather runs removed 2 TDDs through the two-week forecast.
- Yesterday, US natural gas demand fell to 98.5 Bcf/d.
- The EIA is expected to report an injection of 52 Bcf today.
Continuous Daily WTI: The prompt daily crude contract closed below its lower Bollinger band yesterday with the market down nearly $8 on the week. Worth noting at the open last night crude traded to a low of $63.64 before quickly rebounding. By one metric or another, both crude and products all remain in the oversold territory today.
