Outlook: Energies look to be lacking direction this morning with crude and products hovering on the opposite side but near unchanged thus far. A lack of fresh market drivers this morning may be a contributing factor. Estimates of Russia’s offline refining capacity continue to grow and the longer-term view for market impact would be neutral for crude and bullish for diesel. Venezuela’s sanction from the US is expected to expire in mid-April and buyers, including India, have already started to adjust their purchases. Venezuela would need to prove they are conducting a fair democratic election this coming year and reports over the last few months would indicate that is not happening. The US dollar is lower today and may continue to face downward pressure if the US moves forward with interest rate cuts this summer. The lower dollar and lower interest rates would be supportive for energy demand. At the very least, the market should find fundamental influence from the API survey later this afternoon.
Crude
- Goldman Sachs estimates 900,000 bpd of Russian crude processing capacity has been knocked offline after another round of drone strikes last weekend.
- OPEC+ JMMC is expected to make no recommendation for production adjustments when they meet next week.
- Yesterday, Russia’s government ordered companies to reduce oil output in Q2 to meet their 9 mbpd output target.
- US sanction relief for Venezuela is set to expire on April 18th.
- Reuters estimates crude stocks fell by 1 million barrels last week.
- The API will report its inventory survey at 3:30 pm CT.
- As of 7:40 am CST: Brent crude oil up $0.01 to $86.76, US dollar index down $0.343 to 104.130 while the nearby e-mini S&P 500 futures contract is up 13.25 to 5293.00.
Diesel
- Reuters estimates diesel stocks rose 1 million barrels last week.
- The April HO contract will expire on Thursday this week.
Gasoline
- Reuters estimates gasoline stocks fell by 1.8 million barrels last week.
- AAA expects retail gasoline prices to surpass $4.00/gallon this summer.
- The April RBOB contract will expire on Thursday this week.
Propane
- Conway is trading at .7900 while Belvieu is trading at .8325.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8450.
- Propane continues to draft support from higher crude prices.
Natural Gas
- Overnight weather runs added 4 HDDs in the two week forecast.
- 2 of 3 trains at Freeport LNG are being shut down for maintenance through May.
- Reuters estimates natural gas stocks fell between 24 and 32 Bcf last week.
- The April natural gas contract is set to expire today.
Continuous Daily HO:
