Outlook: The energy complex is off and running this morning with WTI eclipsing $85 for the first time since October. Heightened geopolitical conflicts and OPEC+ production cuts have been the catalyst for the bullish move this year. Ukraine is continuing to target Russian oil infrastructure and each disruption contributes to a tighter environment. Ukraine expanded its attack range this morning with a strike on Russia’s Taneco refinery which is over 1,115 km from the Ukrainian border. It’s estimated 1.6 mbpd of crude processing has been impacted so far and it was previously estimated 3 mbpd was in drone range. This number has now grown to 4.1 mbpd. The Israel/Hamas war also showed escalation this week with an Israeli airstrike killing 3 top Iranian leaders and a retaliatory move is expected. The inflationary battle may start to face headwinds if geopolitical risk continues to push energy prices higher and the economic environment could complicate quickly.
Crude
- Prompt WTI futures have eclipsed $85 today.
- A Ukrainian drone strike hit Russia’s third largest oil refinery today, while damage was said to not be significant. (Reuters)
- An Israeli airstrike on an Iranian embassy compound in Damascus, Syria killed three top Iranian commanders yesterday. Iranian leaders said the attack would not go unanswered.
- Russia’s crude exports in the last week of March rose to the highest level this year at 3.74 mbpd. (BBG)
- Mexico plans to halt a portion of its crude exports through June to fight rising fuel prices domestically. The US buys ~400,000 bpd of crude from Mexico. (BBG)
- OPEC+ JMMC will meet tomorrow and is not expected to recommend any policy changes.
- Reuters estimates crude stocks fell 2 million barrels last week.
- The API will report its inventory survey at 3:30 pm CT.
- As of 8:15 am CST: Brent crude oil up $1.22 to $88.64, US dollar index down $0.119 to 104.900 while the nearby e-mini S&P 500 futures contract is down 44.25 to 5251.00.
Diesel
- Russia’s exports of diesel-type fuel fell to their lowest since December on a ten-day moving average basis at 840,000 bpd. (BBG)
- Reuters estimates diesel stocks fell 400,000 barrels last week.
Gasoline
- Continuous RBOB futures are showing a Golden Cross today with the 50-day moving average crossing above the 200-day moving average. This move is seen as bullish.
- Reuters estimates gasoline stocks fell 2 million barrels last week.
Propane
- Conway is trading at .7750 while Belvieu is trading at .8150.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8300.
- Conway propane is trading at 38% to WTI.
Natural Gas
- Overnight weather runs added 8 HDDs in the two-week forecast.
- The first week of April is forecasted to be warmer than the 10-year average.
- Reuters estimates nat gas stocks fell between 28 to 48 Bcf last week.
Continuous Daily RBOB: A golden cross is a bullish technical indicator when the 50-day moving average crosses above the 200-day moving average. Look for gasoline prices to remain supported with a clearly defined bullish trend intact.
