Outlook: The energy complex is being jostled around this morning, trading on both sides overnight into this morning. Crude has adopted a weaker tone relative to products to start the day, however, there remains an overall lack of conviction with prompt contracts hovering near even. Traders are weighing the probability that ceasefire talks today will amount to anything. With several sessions in prior months resulting in zero progress, there seems to be very little steam to trade the rumor rather than the fact. A lower US dollar this morning may be helping prevent a more convincing downward move despite a few bearish fundamental headlines, including a decline in India’s crude imports. China showed an uptick in crude imports for March while oil product exports also rose. Chinese manufacturing data will garner more focus tonight as a more telling signal for the overall health of China’s economy. It’s Fed meeting week in the US but the decision to leave interest rates unchanged is nearly concrete this time around. As always, the rhetoric to follow may give us fresh insight as to what the Fed expects for the rest of the year. The recent trend has continued to push interest rate cut probabilities further back which would provide headwinds for energy demand.
Crude
- A Hamas delegation is visiting Cairo today for talks aimed at securing a ceasefire. (Reuters)
- China’s crude throughput was 15.1 mbpd in March, 4% higher than the average of the first two months of the year. (BBG)
- India’s March crude imports fell 1.1% vs year-ago levels. (BBG)
- Global crude in floating storage fell 17% w/w, according to Vortexa data.
- Baker Hughes reported oil rig counts fell by 5 last week. US rig counts have fallen in five of the last six weeks.
- The Trans Mountain pipeline is expected to begin operation on May 1st.
- Both Core and headline PCE posted 0.1% above consensus on Friday. This is a preferred metric of inflation for the Fed and its interest rate decisions.
- Chinese manufacturing data will be reported tonight.
- The Fed will meet on Wednesday and is not expected to make any policy changes.
- As of 8:10 am CST: Brent crude oil down $0.75 to $88.75, US dollar index down $0.143 to 105.795 while the nearby e-mini S&P 500 futures contract is up 11.25 to 5143.00.
Diesel
- Chinese refiners increased oil product exports by 58% m/m to a 13-month high.
- HO managed money added 142 contracts and are now net long 3,360 contracts as of last week.
- LTD for May HO is Tuesday April 31st.
Gasoline
- A Russian oil depot in Kaluga Oblast was hit by a Ukrainian drone strike yesterday that resulted in a gasoline tank explosion.
- RBOB managed money traders net sold 6,563 contracts and are net long 72,962 contracts as of last week.
- LTD for May RBOB is Tuesday April 31st.
Propane
- Conway is trading at .7525 while Belvieu is trading at .7850.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8175.
- Conway propane is trading at 37% to WTI.
Natural Gas
- Overnight weather runs added 1 TDDs for the two-week forecast.
- Managed money for natural gas rose to the most bullish level in 3-months last week.
- Friday, natural gas prices in the Permian basin fell to -$3/mmBtu after a pipeline was shut due to a fire.
- Baker Hughes reported nat gas rigs fell by 1 to 105 last week.
Continuous Daily WTI: WTI bulls will look for the 9-day moving average to provide support this week if they look to regain control.
