Outlook: Energies are facing weekly declines as they sink into the red this morning. Crude markets have begun to stir up range-bound discussions as it has been stuck in a $4 range for nearly a month. Another test of $80 this week proved unsuccessful and its clear there is uncertainty on where global supply is going in the current environment. Refined products have seen more volatility but ultimately haven’t given any directional conviction either. Macroeconomic influences have also felt idle as interest rates are expected to remain unchanged for a few more months. Employment data was mixed this morning with nonfarm payrolls showing growth while unemployment saw surprise growth. Poor economic data in this environment can be viewed as supportive as it could incentivize the Fed to lift rates sooner or by a larger clip by the end of the year, while positive data can reflect a resilient economy and recessionary avoidance, presenting a goldilocks situation. The US dollar has fallen to its lowest level since January which may help limit downside in dollar-based commodities temporarily.
Crude
- The Keystone pipeline which transports 600,000 bpd of crude, was temporarily shut yesterday afternoon for precautionary measures but resumed service later in the day. (Reuters)
- Russia produced 9.54 mbpd of crude in February, 82,000 bpd higher than Jan. (BBG)
- Mixed opinions on global supply have held crude within a 4 dollar range for the last several weeks.
- Fed Chair Jerome Powell said yesterday the central bank is not far from gaining enough confidence that inflation is falling sufficiently to begin rate cuts.
- US nonfarm payrolls will be reported at 275k vs 200k est and 229k last.
- US unemployment rose to 3.9% vs remaining steady at 3.7%.
- Baker Hughes will report rig counts at 12:00 pm CT.
- As of 7:51 am CST: Brent crude oil down $0.18 to $82.78, US dollar index down $0.425 to 102.400 while the nearby e-mini S&P 500 futures contract is up 13.25 to 5176.00.
Diesel
- India’s fuel consumption rose 5.7% y/y in February, according to government data on Thursday.
- Gasoil stocks at Europe’s ARA hub fell 1.3% over the last week.
- Singapore middle distillate stocks fell 2% last week to a two week low.
Gasoline
- RBOB futures may test support at the 1 week low near $2.5192 today
- Gasoline stocks at Europe’s ARA hub fell 5% last week.
- Singapore light distillate stocks fell 8% last week to a two week low.
Propane
- Conway is trading at .7475 while Belvieu is trading at .8125.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7900.
- The EIA reported propane stocks fell less than expected at 4,000 barrels last week.
- The US exported 73% of production last week.
Natural Gas
- Overnight weather runs removed 5 HDDs in the two week forecast.
- Temperatures through March 18th are expected to be significantly warmer than the 10-year average.
- The EIA reported inventories fell 40 Bcf last week.
- Working gas inventories are 551 Bcf higher than 5-year average levels.
Continuous Daily USD: The US dollar has fallen to its lowest level in nearly 2 months this week. A lower US dollar makes dollar-based commodities cheaper for non-dollar currency holders and can be a supportive element.
