Outlook: Energies are off to start the day today with crude and diesel off just over 1%. RBOB posted the strongest day yesterday and is trying to resist the downside move with the complex. There could be some risk-off selling today with US inflation data due out tomorrow. The US dollar is up over 400 points today which can put downward pressure on commodities. Fundamental headlines have leaned bullish this week, with the Canadian wildfire providing a growing supply disruption. Production loss in Canada could result in fewer exports to the US which could help maintain US crude stocks streak of weekly draws into next week. Reuters expects draws across the board with crude expected to fall by 1.6 million barrels. The API will release its inventory survey this afternoon to give us further insight into what to expect for the official government data tomorrow morning.
Crude
- Wildfires moving through Canada have shut in at least 234,000 bpd of oil and gas production so far.
- Aramco is set to increase its dividend to investors and the Saudi government by $10 billion, according to BI.
- In an interview today, the UAE played down the idea that OPEC would need further cuts to balance the crude market this year.
- Bank of America lowered its 2023 Brent crude forecast by $8 to $80 for the rest of the year. WTI currently trades just under a $4 discount to Brent.
- US political leaders are expected to meet this afternoon to discuss the debt ceiling.
- The EIA will release it's Short-Term Energy Outlook tomorrow.
- OPEC will release its monthly report on Thursday.
- Reuters estimates crude stocks fell by 1.6 million barrels last week.
- As of 8:38 am CST: Brent crude oil down $0.80 to $76.20, US dollar index up $0.413 to 101.790 while the nearby e-mini S&P 500 futures contract is down 20.25 to 4132.00.
Diesel
- Reuters estimates diesel stocks fell by 800,000 barrels last week.
- US corn planting rose to 49% planted last week, up from 26% the week prior. The 5-year average is 42% for this time period.
Gasoline
- Reuters estimates gasoline stocks fell by 1.3 million barrels last week.
- RBOB should expect to find resistance at $2.50 as it looks to rebound into the driving season. Pump prices remain elevated relative to futures values.
Propane
- Conway is trading at .7050 while Belvieu is trading at .7100.
- Conway is trading at 40% of crude.
- The US is exporting 62% of production as of 4/28/23.
Natural Gas
- Overnight weather runs added 4 CDDs through the two-week forecast.
- Yesterday, US natural gas demand fell to 90.0 Bcf/d.
- Canadian wildfires are likely providing support to the natural gas market despite soft domestic demand.
Canada Wildfires: The wildfires in Canada have continued to have a growing impact on oil production with over 234,000 bpd of oil production currently disrupted. Edmonton Mixed Sweet’s discount to WTI narrowed by a third to $2.50 a barrel due to the expected supply constraint. In 2016 more than 1 million bpd of oil production was shut in due to fires moving through the oil sands.
