Outlook: Energies are lacking conviction this morning but are also proving resistant to another day of selling which favors the bulls. WTI closed lower for the first time in 7 sessions yesterday as the market took a pause. The risk-off sentiment is certainly lurking with Iran stating they will not weaponize the Straight of Hormuz, which is a major chokepoint for petroleum movements. At the same time, their acknowledgment of the ability to close the shipping route will keep traders leery. Many analysts have revised their crude forecasts higher over the last month in anticipation of a tighter global market. The EIA will release its monthly update today around noon to provide their insight after this bullish rally. Prompt WTI was trading around $79 during the release of their last report on March 7th. The IEA and OPEC will release their monthly reports later this week.
Crude
- Iran’s revolutionary guard said they will not block the Straight of Hormuz while recognizing the option to do so. A complete blockage would be a significant upside risk to petroleum.
- Mexico’s state energy company is planning to cut at least 330,000 bpd of crude exports in May. (Reuters)
- US Gulf Coast heavy crude prices are firming up with the expected loss of both Mexican and Venezuelan heavy crude varieties.
- Senior Israeli officials have said cease-fire discussions are again making progress. (BBG)
- The 291,000 bpd Catlettsburg refinery in northeastern Kentucky dropped production by 38% due to a temporary lock on the Ohio River which was shut over the weekend due to storm debris.
- The EIA will release its short-term energy outlook today around noon.
- Reuters estimates crude stocks rose 2.4 million barrels last week.
- The API will report its inventory survey today at 3:30 pm CT.
- US March CPI will be reported tomorrow morning at 7:30 am CT.
- As of 8:38 am CST: Brent crude oil up $0.06 to $90.44, US dollar index down $0.219 to 103.919 while the nearby e-mini S&P 500 futures contract is up 17.25 to 5270.00.
Diesel
- Reuters estimates diesel stocks fell 1.2 million barrels last week.
- Spot group 3 diesel basis remains at a 5-year low at -$0.0625
- Group 3 Sep-Nov diesel basis strip indicative midpoint ~$0.01. Please reach out for firm values.
Gasoline
- Reuters estimates gasoline stocks fell 1.8 million barrels last week.
- Spot group 3 gasoline basis is ~16 cents below 5-year average levels at -$0.3275.
- Group 3 Sep-Nov gasoline basis strip indicative midpoint ~$0.05.
Propane
- Conway is trading at .7900 while Belvieu is trading at .8325.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8400.
- Conway propane is trading at 39% to WTI.
Natural Gas
- Overnight weather runs added 1 HDDs in the two-week forecast.
- Spot natural gas prices in East Texas have fallen to multi-decade lows, trading around 80 cents.
- Reuters estimates natural gas stocks changed between -9 and +14 Bcf last week.
Continuous Daily HO Crack: Diesel cracks have fallen under pressure as refineries return from a busy maintenance season. The spreads may find support as refiners shift production to focus on gasoline ahead of the summer driving season.
