Outlook: The energy complex looks to be in idle this morning which crude and gasoline hovering just under even while diesel holds losses of over 2 cents. The wave of profit-taking yesterday held through a supportive EIA report and dovish rate cut view from the Fed. Outside markets are continuing their rally with the US dollar working lower today. With the median forecast calling for 75 basis points to be cut this year, participants are finding comfort that demand will support higher prices in energy. We’ll continue to follow the medium to longer term trends to formulate a directional bias and that bias feels bullish right now. Forecasts for $90 oil this summer are becoming more abundant but its important to remember that one hiccup that points toward economic instability could send prices tumbling. Buying options is a good strategy to limit losses when the market moves against a position. Options are also a great tool for hedging and can be implemented to help manage DPR limitations. Please reach out for recommendations on what might work for your situation.
Crude
- Continuous WTI futures remain above the 9-day moving average which may signal the bullish trend remains intact despite the selloff yesterday.
- Yemen’s Houthi’s told China and Russia their ships won’t be targeted during talks in Oman. (BBG)
- The EIA reported US crude stocks fell by 1.9 million barrels last week.
- US net crude imports fell by nearly 1 mbpd with a 1.7 mbpd increase in exports.
- The Fed left interest rates unchanged yesterday and forecast 75 bp of cuts in 2024.
- The CME FedWatch tool saw an increase from 55% to 67% for a rate cut in June following the Fed meeting yesterday.
- As of 8:07 am CST: Brent crude oil down $0.16 to $85.78, US dollar index down $0.283 to 103.555 while the nearby e-mini S&P 500 futures contract is down 24.25 to 5311.00.
Diesel
- The EIA reported diesel stocks fell by 624,000 barrels last week.
- US diesel demand rose 12.2% w/w to 3.7 mbpd.
- Trendline support for prompt diesel futures sits around $2.60
Gasoline
- The EIA reported gasoline stocks fell 3.3 million barrels last week.
- US gasoline exports rose above 1 mbpd last week while domestic demand saw a marginal decline to 8.8 mbpd.
- Nearby RBOB futures remain above the 9-day moving average which would hint the bullish trend remains intact.
Propane
- Conway is trading at .7675 while Belvieu is trading at .8150.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8250.
- Propane stocks rose unexpectedly by 352,000 barrels last week.
- Propane exports rose by 430,000 bpd to 1.7 mbpd last week and 68% of production was exported.
Natural Gas
- Overnight weather runs added 3 HDDs in the two week forecast.
- Temperatures through March 31st are expected to be cooler than average.
- 2 of 3 trains at Freeport LNG are being shut down for maintenance through May.
- Reuters estimates natural gas stocks rose between 2 and 9 Bcf last week.
- The EIA will report inventories at 9:30 am CT.
Continuous Daily WTI: Crude is finding support at its 9-day moving average today. A close below could invite a trip back toward $80. In the absence of a fundamental shift, buyers may look for a reentry at sub $80 levels.
