Outlook: Energies are looking to maintain the rally this week with crude and products breaking through resistance targets. The technical momentum does have the market beginning to lean overbought which could stymy the run in the ladder half of the week if fresh bullish headlines are absent. OPEC+ JMMC made no adjustments to the current output policy, however, they did call for more disciplined compliance from those who are overproducing. Iraq and Kazakhstan have been notable overproducers and will be under the spotlight in the months ahead. If the two do become more compliant, it would only contribute to a tighter marketplace. OPEC+ will meet again on June 1st and if prices find stability in this higher range, they may consider unwinding a portion of the voluntary cuts. The higher price environment has already affected the US which stated today that they will pause SPR purchases and will not award barrels for the August and September proposals. The API survey yesterday afternoon reflected further tightening for domestic fundamentals and we’ll look for confirmation from the EIA later this morning.
Crude
- The Biden Administration announced that they will not move forward with their latest plans to buy oil from the SPR due to rising prices.
- Mexico’s state-owned energy company made requests to cancel 436,000 bpd of sales to inject locally.
- OPEC+ JMMC met this morning and made no adjustment to the current output quotas.
- The committee stated countries overproducing will need to submit detailed compensation plans for correction by April 30th.
- Prompt WTI futures closed above psychological resistance at $85 yesterday.
- WTI futures are beginning to tip overbought today. Volume and open interest have also stalled in the May contract.
- Reuters estimates crude stocks fell 1.5 million barrels last week.
- The API survey showed crude stocks fell 2.3 million barrels last week.
- The EIA will report inventories at 9:30 am CT.
- Fed Chair Jerome Powell will speak today at 11:10 am CT.
- As of 8:34 am CST: Brent crude oil up $0.59 to $89.51, US dollar index down $0.094 to 104.722 while the nearby e-mini S&P 500 futures contract is down 7.25 to 5252.00.
Diesel
- Continuous diesel futures closed above the 100-day moving average yesterday and are looking to close above the 50-day today. The technical momentum may support a more sustainable uptrend in diesel.
- The API survey showed diesel stocks fell 2.5 million barrels last week.
- Reuters estimates diesel stocks fell 0.6 million barrels last week.
Gasoline
- The API survey showed gasoline stocks fell 1.4 million barrels last week.
- Reuters estimates gasoline stocks fell 0.8 million barrels last week.
Propane
- Conway is trading at .7850 while Belvieu is trading at .8300.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8400.
- Conway propane is trading at 38% to WTI.
- OPIS estimates propane stocks rose 780,000 barrels last week.
Natural Gas
- Overnight weather runs added 1 HDDs in the two-week forecast.
- The Biden Administration said they are open to ending a pause on approvals for LNG export facilities in exchange for Congress passing a new Ukrainian aid package.
- Reuters estimates nat gas stocks fell between 28 to 48 Bcf last week.
Continuous Daily WTI: Crude is beginning to tip overbought from both a Bollinger and RSI standpoint. An RSI above 70 or a close above the upper Bollinger could bring forth selling later this week.
