Outlook: The energy complex is trying to hold its ground in positive territory this morning but has slipped from its early morning highs. WTI traded to a high of $79.80 earlier this morning but is reflecting a lack of fuel needed to make a run back above $80. Headlines are providing mixed sentiment today with reports of Russia overproducing oil while Chinese oil imports rise in April year-over-year. JPMorgan’s demand indicators are also seeing higher-than-expected demand to kick off May which may contribute to a tighter supply environment. On the geopolitical front, Israel has said today they will refuse to agree to any truce before completing its military operation in Rafah. Risk on sentiment could reintroduce risk premium to energies ahead of the weekend. Crude prices have consolidated between the 100-day and 200-day moving averages, which is a wedge that is slowly shrinking. Look for prices to remain rangebound until oil breaches one of these technical levels.
Crude
- Russia’s crude production in March exceeded their OPEC+ quota by 319,000 bpd.
- Goldman Sachs is pricing in a 37% chance that OPEC+ announces production increases at their June meeting.
- The US DOE raised its SPR purchase price limit to $79.99, which is the first time they have explicitly set a price ceiling.
- Chinese crude oil imports averaged 10.88 mbpd in April, up 5% from year ago levels but down 5% from March.
- JPMorgan’s high frequency demand indicators estimate global oil consumption averaged 103.5 mbpd in the first week of May, 160,000 bpd above the bank’s earlier estimate. (BBG)
- The EIA reported crude stocks fell 1.3 million barrels last week.
- Refinery utilization rates rose 1% last week to 88.5% but remain below year-ago levels of 91% during this time period.
- As of 8:38 am CST: Brent crude oil up $0.10 to $83.68, US dollar index down $0.097 to 105.449 while the nearby e-mini S&P 500 futures contract is down 2.25 to 5210.00.
Diesel
- Prompt diesel futures are trading above the 9-day moving average today, a close above may provide further technical support.
- Chicago and Group 3 diesel values are continuing to move lower on weaker demand.
- The EIA reported diesel stocks rose 560,000 barrels last week.
- US diesel stocks are 7% below 5-year average levels.
Gasoline
- The EIA reported gasoline stocks rose 915,000 barrels last week.
- Implied gasoline demand rose for the first time in 5 weeks last week.
Propane
- Conway is trading at .6750 while Belvieu is trading at .6925.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7300.
- Conway propane is trading at 36% to WTI.
- Propane stocks rose 2.1 million barrels last week which exceeded the average industry estimate.
Natural Gas
- Overnight weather runs were unchanged for the two-week forecast.
- Reuters estimates nat gas stocks rose between 77-90 Bcf last week.
- The EIA will report inventories at 9:30 am CT.
- US production has fallen to its lowest level since spring of 2022.
Total Products Supplied: The 4-week average reading for petroleum demand paints a different picture than individual products. This metric suggests demand is tracking with year ago levels and remains well above 5-year average levels.
