Outlook: The energy complex is finding strength today to extend the rebound on Friday. Recessionary fears may be fading for the moment as the dust settles from a volatile few weeks in the macro scene. Next on the docket will be how the US handles the debt ceiling, with officials scheduled to meet tomorrow. Fundamentally, headlines lean bullish with Russia showing a decline in crude processing to start the month. The country has pledged a 500,000 bpd production cut since March, and this is the first signal of that materializing. Crude oil in floating storage also saw a sharp decline last week which can be seen as positive for demand. Vessels holding crude must be idle for 7 days before they are considered floating storage. With the significant shake-up in the energy market as of late, we could see some notable revisions to the EIA’s monthly STEO report scheduled to be released tomorrow. The EIA will release its weekly inventory data on Wednesday which will come after US inflation data to start the day off.
Crude
- According to Bloomberg, Russian refiners processed an average of 5.39 mbpd of crude in the first three days of May, which is 216,000 bpd lower than the April average.
- India’s oil ministry is suggesting a ban of diesel vehicles in cities with over a million people by 2027.
- Wildfires across Alberta have disrupted at least 50,000 bpd of oil production so far.
- PBF Energy’s Torrance refinery in California will shut down its 90k bpd FCC for a 7-8 week maintenance period.
- Global crude in floating storage fell by 16% last week, according to Vortexa.
- US political leaders are expected to meet tomorrow to discuss the debt ceiling.
- The EIA will release its Short-Term Energy Outlook tomorrow.
- OPEC will release its monthly report on Thursday.
- Baker Hughes reported US oil rigs fell by 3 last week to 591.
- As of 8:14 am CST: Brent crude oil up $1.44 to $76.74, US dollar index down $0.070 to 101.144 while the nearby e-mini S&P 500 futures contract is up 4.25 to 4154.00.
Diesel
- India’s fuel consumption fell 10.2% m/m for April.
- India’s diesel sales rose 8.6% y/y for April.
- Last week’s COT report showed ULSD-managed money traders decreased net length by 10,528 contracts and flipped net short 2,755 contracts
Gasoline
- India’s gasoline sales rose 2.9% y/y for April.
- Last week’s COT report showed RBOB-managed money traders decreased net length by 4,046 contracts to net long 47,920 contracts.
Propane
- Conway is trading at .7000 while Belvieu is trading at .7050.
- Conway is trading at 41% of crude.
- The US is exporting 62% of production as of 4/28/23.
- According to Energy Aspects, Asian chemical producers could rely more heavily on propane as a feedstock due to increases in production and ample supply from the US.
Natural Gas
- Overnight weather runs added 4 TDDs through the two-week forecast.
- Friday, US natural gas demand fell to 90.9 Bcf/d.
- US natural gas rigs fell by 4 last week.
Oil Trade Balance: For just the second time in Commerce Department record, the US registered a petroleum-trade surplus after accounting for inflation. Exports rose over 24% in March to a record $27.6 billion, marking the largest monthly advance since 2017. Imports totaled $27.1 billion.
