Outlook: Energies are holding marginal losses early this morning which may be technically motivated as markets began to tip overbought on some shorter-term metrics. Overall, the headlines are mixed today with Russia expecting to export 10% more crude in March due to Ukrainian strikes on refineries, while India on the other hand is stepping up purchases of US crude. Tighter enforcement of price cap sanctions has caused India to shift away from Russian oil with prices on the rise. Additionally, the US announced yesterday it may ramp up SPR purchases with maintenance at one storage site wrapping up. Crude prices below $80 can be found from September on, which is where their purchases are expected to land. Unfortunately for the US consumer, gasoline futures have risen to 7-month highs which will likely translate to higher prices at the pump heading into to the summer driving season. The preliminary Reuters poll suggests gasoline stocks fell by another 2 million barrels last week to reflect the tightening environment. The API will report its survey this afternoon for another look-in.
Crude
- Russia’s oil exports in March are expected to increase 10% compared to initial planning due to refinery downtime. (Reuters)
- Russia said today they plan to defend oil and gas facilities with missile systems moving forward. (Reuters)
- India has purchased around 7 million barrels of US crude for April delivery, which would be the largest monthly volume since May according to Kpler data. (BBG)
- Yesterday, the EIA drilling report showed expectations for US crude production to increase by 10,000 bpd between March and April. DUCs fell by 3 to 4,482 from Jan to Feb.
- Reuters estimates crude stocks fell by 10,000 barrels last week.
- The API will report its inventory survey today at 3:30 pm CT.
- The Fed will meet tomorrow to announce its rate decision and is expected to leave rates unchanged.
- The CME FedWatch tool suggests a 55% chance of a June rate cut.
- As of 7:51 am CST: Brent crude oil down $0.09 to $86.80, US dollar index up $0.465 to 103.897 while the nearby e-mini S&P 500 futures contract is down 19.25 to 5196.00.
Diesel
- Reuters estimates diesel stocks rose by 100,000 barrels last week.
- Continuous diesel closed above its 100-day moving average yesterday and also traded above its upper Bollinger band.
Gasoline
- Reuters estimates gasoline stocks fell by 2.6 million barrels last week.
- Continuous nearby RBOB futures rose to their highest level since August yesterday.
Propane
- Conway is trading at .7675 while Belvieu is trading at .8150.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8250.
- Conway is trading at 39% value to WTI.
Natural Gas
- Overnight weather runs added 6 HDDs in the two week forecast.
- Temperatures through March 31st are expected to be cooler than average.
- The EIA’s drilling report yesterday forecasts US gas production will decrease by 167 mmcf/d between March and April.
- Reuters estimates natural gas stocks rose between 2 and 9 Bcf last week.
Continuous Weekly 321 Crack: The 321 crack spread is a key measure of profitability for refiners and has been steadily climbing since the beginning of Q4. Growing appetite for US oil products and domestic refinery downtime have provided support.
