Outlook: The energy complex started the morning lower but is again lifting off the lows ahead of today’s EIA report. The API survey yesterday afternoon provided bearish sentiment in the last hour of trade as it showed healthy builds across the board. This completely contradicted the Reuters poll which suggested draws of over a million barrels across the board. Bearish fundamentals have been a key underlying factor for the month-long slide in energies and larger-than-expected builds would only increase the odds of prices working into a lower range. Product demand will be a key point of focus today as traders access pressure being felt by the high-interest rate environment. Diesel prices have settled into a range over the last week while gasoline prices have held a weaker tone. Diesel prices fell to a low of $2.15 last spring with the heavier trade in the $2.30s but a move to this zone will likely take additional bearish elements.
Crude
- Continuous nearby WTI has put in a low today below both the 100-day moving average and trendline support. A close below would be a bearish technical indication.
- CIA Director Bill Burns is traveling to Israel today and remains optimistic that a ceasefire deal will come to fruition. (Reuters)
- Mexican crude exports fell in the first week of May to 533,000 bpd, down 28% from the same period in April. (BBG)
- The EIA May STEO lowed showing a lower revision for 2024 global oil demand by 30,000 bpd but a higher revision for 2025 global oil demand by 70,000 bpd.
- Reuters estimates crude stocks fell 1.1 million barrels last week.
- The API survey showed crude stocks rose 500,000 barrels last week.
- The EIA will report inventories at 9:30 am CT.
- As of 8:35 am CST: Brent crude oil down $0.70 to $82.46, US dollar index up $0.148 to 105.560 while the nearby e-mini S&P 500 futures contract is down 17.25 to 5196.00.
Diesel
- The API survey showed diesel stocks rose 1.7 million barrels last week.
- Reuters estimates diesel stocks fell 1.1 million barrels last week.
Gasoline
- The API survey showed gasoline stocks rose 1.5 million barrels last week.
- Reuters estimates gasoline stock fell 1.3 million barrels last week.
Propane
- Conway is trading at .6625 while Belvieu is trading at .6825.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7300.
- Conway propane is trading at 36% to WTI.
- Expect propane to move lower to end the week if crude closes below support today.
Natural Gas
- Overnight weather runs added 4 TDDs for the two-week forecast.
- Reuters estimates nat gas stocks rose between 77-90 Bcf last week.
- The EIA STEO report showed lower revisions for both natural gas production and demand for 2024 and 2025.
- Bloomberg is forecasting China’s LNG imports will be 18% higher than last year in May due to hotter-than-normal forecasted temperatures.
Continuous Daily HO: Diesel futures have started to consolidate around $2.45 in the prompt contract. The market remains in Contango which each month trading at a premium to the previous month through the November contract.
