Outlook: The energy complex is looking for a bounce today while bearish pressures remain evident. Ceasefire talks are continuing to stall which should be a surprise to no one given the stalemate has been ongoing for months now. A potential Iranian retaliation and the risk of closure in the Strait of Hormuz will hold upside risk premium. The API survey yesterday afternoon also reflected a more bearish view than previous analyst estimates but traders will look for confirmation from the EIA later this morning. Today’s inflation readings have provided stronger headwinds with higher than expected readings across the board. Resilient inflation will support the narrative that the Fed will need to hold interest higher for longer, which would be negative for energy demand. Interest rate hikes have been off the table for a while now, however, if a sticky inflationary environment persists these discussions could resurface. The FOMC minutes will be released at 1:00 pm CT today which will provide further insight from the Fed on their view going forward.
Crude
- Hamas said on Tuesday that an Israeli proposal on a ceasefire did not meet the demands of the Palestinian militant factions. (Reuters)
- The EIA revised its 2024 oil demand growth lower by 480,000 bpd but increased its total oil demand to 102.9 mbpd due to higher demand revisions for 2022 and 2023.
- The EIA forecasts slightly more crude production this year and next due to higher crude prices.
- Enterprise Products Partners received approval to build a deepwater oil port off the coast of Texas, which will export crude to Europe and China. The port will have the ability to load supertankers while most existing terminals can only handle small ships.
- Reuters estimates crude stocks rose 2.4 million barrels last week.
- The API survey showed crude stocks rose by 3 million barrels last week.
- The EIA will report inventories at 9:30 am CT.
- US March CPI was reported at 3.5% y/y vs 3.4% est. and 3.2% last.
- Fitch cut its outlook on China’s sovereign credit rating to negative today, citing risks to public finances as the economy faces increasing uncertainty. (Reuters)
- 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.
- The API survey showed diesel stocks rose by 120,000 barrels last week.
Gasoline
- Reuters estimates gasoline stocks fell 1.3 million barrels last week.
- The API survey showed gasoline stocks fell by 609,000 barrels last week.
Propane
- Conway is trading at .7850 while Belvieu is trading at .8250.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8300.
- Conway propane is trading at 39% to WTI.
- OPIS estimates propane stocks rose 780,000 barrels last week.
Natural Gas
- Overnight weather runs removed 4 HDDs in the two-week forecast.
- The EIA made higher revisions to both 2024 and 2025 natural gas production in its latest EIA STEO report. 2024 production is now expected to average 103.58 Bcf/d.
- Reuters estimates natural gas stocks changed between -9 and +14 Bcf last week.
Continuous Daily WTI: Crude will look to hold above its 9-day moving average to maintain short term bullish momentum today.
