Outlook: Energies are working higher as the morning session progresses with crude and products all observing gains. The market started slow earlier this morning but buying momentum has begun to build. Supportive comments out of Russia could be providing a bump with Putin stating their production cut is aimed to support pricing. Russia’s exports have remained strong throughout the pledged 500,000 bpd cut which has caused the opposite effect on pricing. Wildfires in Canada are also ongoing and causing disruptions to oil supply. Oil imports from Canada have remained steady so far, but we could see that number fall due to supply constraints. The EIA will confirm inventory stats for last week at 9:30 CT this morning. Industry estimates are fairly widespread with the API showing a build in crude and a draw in products, while Reuters estimates a draw in crude and gas and a build for diesel.
Crude
- Bloomberg suggests Russia’s increase in seaborne exports is funded from their strategic reserves which have allowed them to cut production while increasing exports.
- Russia’s President Vladimir Putin said their actions to reduce oil production are aimed at supporting the price environment.
- Canadian wildfires are ongoing and are having variable impacts on oil production.
- Nearby WTI is finding support at $70.
- Reuters estimates crude stocks fell by 0.9 million barrels last week.
- An industry survey yesterday afternoon showed crude stocks rose by 3.7 million barrels last week, according to sources citing the API.
- The US SPR fell by 2.4 million barrels last week.
- The EIA will report inventories at 9:30 CT.
- As of 8:15 am CST: Brent crude oil up $0.56 to $75.47, US dollar index up $0.350 to 102.911 while the nearby e-mini S&P 500 futures contract is up 18.25 to 4141.00.
Diesel
- Reuters estimates diesel stocks rose by 100,000 barrels last week.
- An industry survey yesterday afternoon showed diesel stocks fell by 900,000 barrels last week, according to sources citing the API.
Gasoline
- Reuters estimates gasoline stocks fell by 1.1 million barrels last week.
- An industry survey yesterday afternoon showed gasoline stocks fell by 2.5 million barrels last week, according to sources citing the API.
Propane
- Conway is trading at .6450 while Belvieu is trading at .6500.
- Conway is trading at 38% of crude.
- The US is exporting 66% of production as of 5/5/23.
- OPIS estimates US propane stocks rose by 1.8 million barrels last week.
- The EIA estimates US propane demand averaged 986,000 bpd last heating season which would be the lowest on record.
Natural Gas
- Overnight weather runs were unchanged through the two-week forecast.
- Yesterday, US natural gas demand rose to 91.8 Bcf/d.
- US dry production is expected to average 101.1 Bcf/d over the next two weeks.
Daily US Dollar: The US dollar is continuing its push higher this week and is testing resistance at its 100-day moving average. A close above this level could be an indicator of further upside to come. A higher US dollar makes it more expensive for non-dollar currency holders to purchase dollar-denominated commodities. With the dollar up over 300 points today, energies may struggle to find substantial strength.
