Outlook: Energies are looking for upward momentum heading into the long holiday weekend. It’s been a bearish week overall with a profit-taking spilling over from last week and a lack of fresh bullish drivers to give the market a pulse. Chatter for $100 oil is growing given stocks around the globe are slowly tightening, primarily due to OPEC+ production constraints. Demand is being suppressed in multiple major economies due to high-interest rates, but the anticipation of rate cuts this summer could allow for stronger growth. If OPEC+ maintains cuts through Q3, the recipe for higher prices will certainly be brewing. It should be expected that if OPEC sees stronger demand and higher prices, they will move to unwind production cuts and utilize their spare capacity. Key inflationary data for the US will be reported tomorrow while markets are closed. If inflation trends below estimates, it would provide motive for the Fed to move forward with rate cuts sooner, rather than later.
Crude
- Asia’s crude imports are expected to rise to 10-month highs in March due to heavy purchasing of Russian oil by China and India. (Reuters)
- Wood Mackenzie estimates that of 465 refining assets, 21% of 2023 global refining capacity is at some risk of closure due to operating costs.
- The EIA reported crude stocks rose 3.1 million barrels last week.
- US net crude imports rose 1.1 mbpd last week.
- US Q4 PCE was reported at 2% vs 2.1% est.
- February PCE, which is a key inflationary indicator, will be reported on Friday while markets are closed.
- As of 8:30 am CST: Brent crude oil up $1.16 to $87.25, US dollar index up $0.082 to 104.430 while the nearby e-mini S&P 500 futures contract is up 0.25 to 5308.00.
Diesel
- The EIA reported diesel stocks unexpectedly fell 1.1 million barrels last week.
- US diesel demand rose b 242,000 bpd last week while exports rose 135,000 bpd to tip implied demand over 5.1 mbpd.
- Today is LTD for April HO.
Gasoline
- The EIA reported gasoline stocks rose 1.3 million barrels last week.
- US gasoline demand fell 94,000 bpd while exports fell 247,000 bpd last week to support the surprise build.
- Today is LTD for April RBOB.
Propane
- Conway is trading at .7900 while Belvieu is trading at .8225.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8450.
- The EIA reported propane stocks fell 43,000 barrels last week.
- US propane exports rose 234,000 bpd to surpass 2 mbpd.
Natural Gas
- Overnight weather runs removed 8HDDs 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 EIA will report inventories at 9:30 am CT.
3-2-1 Crack: Crack spreads have been on the retreat with refiners returning from seasonal maintenance cycles. Last spring, margins bottomed out in April at $26.94, however, demand is outpacing year-ago levels and may provide support.
