Outlook: Energies opened the session lower but are looking to claw back positive this morning. Reports of Israel withdrawing troops from southern Gaza and another round of ceasefire discussions were de-escalatory in nature. WTI closed above 70 on its RSI both Thursday and Friday last week reflecting overbought levels and may be allowing for profit-taking today. Despite the lower trade, medium to long-term technicals still suggest bullish momentum remains intact. The EIA, OPEC, and IEA are all due to release monthly reports this week. OPEC has been the most bullish with its demand outlook of the three and traders will look to see if they maintain that view as a key indication of whether they begin to unwind supply cuts.
Crude
- Israel said on Sunday it had withdrawn more soldiers from southern Gaza.
- Israel and Hamas sent teams to Egypt for ceasefire talks over the weekend, however, Hamas officials said no progress was made as of this morning.
- WTI has pulled back from overbought levels today after posting an RSI value above 70 on Friday.
- Crude spreads are rising today despite the weaker tone in the outright, suggesting tighter supplies remain a concern.
- WTI long to short ratio rebounded to 4.8 to 1 which still leaves room for bullish momentum.
- Global crude in floating storage fell 17% last week.
- Baker Hughes reported US oil rigs rose by 2 to 508 last week.
- The EIA will release its short term energy outlook tomorrow around noon.
- As of 8:38 am CST: Brent crude oil down $0.28 to $90.89, US dollar index down $0.039 to 104.256 while the nearby e-mini S&P 500 futures contract is down 3.25 to 5249.00.
Diesel
- Last week’s COT report showed HO managed money net bought 2,427 contracts and are net long 5,871 contracts.
- Colorado State University predicts a highly active hurricane season this year which presents an upside risk to the fuel market. Consider basis swaps to establish broader coverage for anticipated sales.
Gasoline
- Last week’s COT report showed RBOB managed money net bought 4,583 contracts and are now net long 83,632 contracts.
- Refiners shifting to heavier gasoline production may provide relief to inventories near term.
Propane
- Conway is trading at .8050 while Belvieu is trading at .8525.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8500.
- Conway propane is trading at 38% to WTI.
Natural Gas
- Overnight weather runs removed 11 HDDs in the two-week forecast.
- Spot natural gas prices in East Texas have fallen to multi-decade lows, trading around 80 cents.
- Baker Hughes reported nat gas rigs fell by 2 to 110 last week.
Russian Diesel Exports: Russia’s diesel exports are on the decline due to outages at various refineries from Ukrainian drone strikes. Exports averaged 900,000 bpd in the 10 days leading up to April 3rd, which is below the 5-year seasonal average of 1.01 mbpd.
