Scott Wilson
Outlook: Crude and product futures are trading lower this morning but remain rangebound. Energy prices were all trading higher before Q1 2024 Real U.S.GDP was released this morning and came in well below expectations. GDP was reported at 1.6% compared to the consensus of 2.5%. Some analysts were projecting a number as high as 3%. Energy prices moved lower on the news as investors are to be digesting the softer-than-expected number. It appears the high-interest rate environment could be slowing the economy down as intended. WTI opened and settled between $82-$84 every day this week and remains consolidated between the converging 9-day and 50-day moving averages. Heating oil has consolidated into the $2.53-$2.58 range, and gasoline is bouncing between $2.68 and $2.75. Expect prices to remain rangebound in the coming months as geopolitical tensions will continue to conflict with supply and demand fundamentals and economic conditions. We discussed yesterday morning how Goldman Sachs placed a $90 ceiling on Brent crude. The investment bank also increased its floor from $70 to $75 citing OPEC’s stronger grip on the market in the face of softer US supply, a firmer demand outlook, and lingering geopolitical risks.
Crude
- Mexico is offering more crude cargoes to customers as fires struck two of their refineries, limiting the country’s plan to limit crude exports and produce more fuel domestically.
- Chinese refiners are paying slightly less for Venezuelan oil after the U.S. reimposed sanctions on the country. (Bloomberg)
- U.S. crude inventories are about 2% below the five-year average for this time of year.
- U.S. crude exports jumped the most in a single week for this year which some believe is evidence that supply issues in the Middle East have brought buyers to the U.S.
- Crude stocks rose 6.4 million barrels last week.
- Crude stocks are 15.9 million barrels below the 5-year average.
- GDP was reported at 1.6% with a consensus estimate of 2.5%.
- The PCE on Friday will be the last macroeconomic report in focus this week.
- As of 8:55 am CST: Brent crude oil down $0.47 to $87.55, US dollar index up $0.075 to 105.330 while the nearby e-mini S&P 500 futures contract is down 77.00 to 5030.50.
Diesel
- Diesel stocks rose 1.6 million barrels last week.
- Diesel stocks are 8.438 million barrels below the 5-year average.
- Average total distillate demand for the past four weeks was down 11.6% compared to last year.
- Those with long hedges heading into expiration on Monday should consider selling to avoid slippage on gallons that have already been delivered on the physical side.
- LTD for May HO is Tuesday April 31st.
Gasoline
- Gasoline stocks fell 600k barrels last week.
- Gasoline stocks are 8.45 million barrels below the 5-year average.
- Average total gasoline demand for the past four weeks was down 3.7% compared to last year.
- LTD for May RBOB is Tuesday April 31st.
Propane
- Conway is trading at .7375 while Belvieu is trading at .7750.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7975.
- Conway propane is trading at 37% to WTI.
- Propane stocks rose 1 million barrels last week.
- Look for the crude trend to dictate direction for the propane market near-term.
Natural Gas
- Natural gas prices fell to the lowest level in a month.
- Yesterday’s close under the 40-day moving average could indicate a downward trend.
- Natural gas prices are being capped by the 9- and 50-day moving averages.
- The surplus to the 5-year average inventory level remains high at 36.4%
