Outlook: The energy complex has met a point of resistance with WTI in the mid to upper 80s and gas and diesel around $2.70. The calls for $100 continue to look more convincing given the recent geopolitical events however its clear a more compelling bullish driver will need to develop to get it there. Global fundamentals are slowly tightening but not necessarily at a pace to swiftly drive energy prices. OPEC released its monthly report this morning and remains the most bullish toward global oil demand this year projecting 2.25 mbpd of growth. This is 1.4 million barrels above the recent EIA forecast released earlier this week. The IEA will release its monthly report tomorrow morning. On the US front, energy demand struggled last week and is trending below year-ago levels across the board. A weaker demand environment this summer would likely keep a lid on prices domestically
Crude
- The US and its allies believe major missile or drone strikes by Iran or its proxies against military and government targets in Israel are imminent. (Reuters)
- OPEC released its monthly report this morning which left 2024 and 2025 oil demand growth unchanged at 2.25 mbpd and 1.85 mbpd, respectively.
- OPEC said its oil output in March rose 3,000 bpd to 26.6 mbpd.
- The EIA reported crude stocks rose 5.8 million barrels last week vs +2.4mb est.
- US net imports rose 1.1 mbpd last week while input to refiners fell 115,000 bpd.
- US March CPI was reported at 3.5% y/y vs 3.4% est. and 3.2% last.
- Skews for both Brent and WTI continue to lean bullish.
- Minutes from the US Fed meeting showed officials increasingly worried about progress in fighting inflation.
- As of 8:28 am CST: Brent crude oil down $0.49 to $89.99, US dollar index down $0.150 to 105.088 while the nearby e-mini S&P 500 futures contract is up 7.25 to 5218.00.
Diesel
- Motiva’s Port Arthur refinery in Texas saw several units shut yesterday due to a power glitch and severe weather. Roughly 300,000 bpd of processing is estimated to be offline.
- The EIA reported diesel stocks rose 1.6 million barrels last week vs -1.2mb est.
- US diesel demand plummeted 14% last week to 2.9 mbpd and is tracking below 5-year lows.
- Corn planting progress was reported at 3% complete vs 2% average.
Gasoline
- The EIA reported gasoline stocks rose 715,000 barrels last week vs -1.3mb est.
- Gasoline demand fell 624,000 bpd last week to 8.6 mbpd but remains above 5-year average levels.
Propane
- Conway is trading at .7675 while Belvieu is trading at .8025.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8200.
- Conway propane is trading at 38% to WTI.
- Propane stocks saw a surprise draw of 105,000 barrels last week. Stocks remain 4 million barrels above 5-year average levels.
Natural Gas
- Overnight weather runs added 5.5 TDDs to the two-week forecast.
- Nat gas flows to Freeport LNG export facility are seen down today after the company said a liquefaction train at the plant tripped.
- Reuters estimates natural gas stocks changed between -9 and +14 Bcf last week.
- The EIA will report inventories at 9:30 am CT.
Continuous Daily HO: Diesel remains the weakest leg of the complex and has struggled to settle in above $2.70. Diesel demand falling to 5-year lows last week is presenting a bearish view moving forward despite refiners prioritizing gasoline production.
