Outlook: The energy complex is showing a convincing move lower out of the gates this morning. Continuous WTI found support on its 50-day moving average yesterday, but that level looks like it will fall today. The 200-day moving average will quickly become the next downside target at $80.09 which may give way to a test of psychological support at $80. Continuous natural gas has seen a reversal this week as the May contract expired and bounced off its 100-day moving average. A lack of export demand due to Freeport’s ongoing outage has backlogged supplies and kept bearish pressure intact. Propane values have tracked lower with crude this week and a move below $80 in crude could allow winter Conway strips to fall to the mid/lower 70c range. 2025/2026 winter strips already sit in that zone and could be considered for an early layer. A busy report slate today could leave the market vulnerable to volatile swings. US Manufacturing data will be reported at 9:00 am CT followed by EIA inventory stats at 9:30 am CT. The Fed will announce its rate decision at 1:00 pm CT with the press conference to follow at 1:30.
Crude
- The Trans Mountain Pipeline received final regulatory approval yesterday and has begun operation. The expansion triples capacity to 890,000 bpd.
- WTI futures found support at the 50-day moving average yesterday but is showing a more convincing move below this level today.
- A Reuters poll showed OPEC production fell 100,000 bpd last month. Iraq is still shown overproducing by 140,000 bpd.
- Reuters estimates crude stocks fell 1.1 million barrels last week.
- The API survey showed crude stocks rose 4.9 million barrels last week.
- The EIA will report inventories at 9:30 am CT.
- The Fed will meet on today and is not expected to make any policy changes.
- As of 8:36 am CST: Brent crude oil down $1.24 to $85.09, US dollar index up $0.024 to 106.245 while the nearby e-mini S&P 500 futures contract is down 7.25 to 5060.00.
Diesel
- The prompt diesel spread fell to its deepest contango since 2020 yesterday as the May contract expired.
- Traders on the East Coast are reportedly struggling to find places to store diesel due to oversupply. (BBG)
- Reuters estimates diesel stocks fell 200,000 barrels last week.
- The API survey showed diesel stocks fell 2.2 million barrels last week.
Gasoline
- India’s gasoline sales rose 5.3% m/m for April and is 12.3% above year ago levels.
- Reuters estimates gasoline stocks fell 1.1 million barrels last week.
- The API survey showed gasoline stocks fell 1.5 million barrels last week.
Propane
- Conway is trading at .7325 while Belvieu is trading at .7650.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7900.
- Conway propane is trading at 37% to WTI.
- OPIS estimates propane stocks rose 2.1 million barrels last week.
Natural Gas
- Overnight weather runs added 5 TDDs for the two-week forecast.
- Freeport has failed to show consistent demand growth and allowed for production to outpace demand at a greater than expected level.
- Reuters estimates nat gas stocks rose 52 to 56 Bcf last week.
Continuous Daily HO: The prompt diesel contract is testing support at $2.50 for the second consecutive day. The front end of the curve is feeling the brunt of the bearish pressure right now. We view deferred values around $2.50 as good buying opportunities.
