Crude Pushes Higher on a Weaker Dollar

April WTI crude oil (CLJ23) this morning is up +0.71 (+0.93%), and Apr RBOB gasoline (RBJ23) is down -1.43 (-0.53%).  April Nymex natural gas (NGJ23) is down -0.013 (-0.51%).

Crude oil and gasoline prices this morning are mixed.  A weaker dollar today is supportive of energy prices.  Also, today's U.S. economic news that showed weekly jobless claims rose more than expected eased concerns that the Fed will be more aggressive in raising interest rates that could crimp economic growth and energy demand.  On the negative side is Chinese energy demand concerns after China Fed CPI and PPI prices were weaker than expected.

Apr nat-gas this morning is moderately lower.  A smaller-than-expected seasonal decline in EIA nat-gas inventories is weighing on prices.  The EIA reported today that nat-gas inventories fell -84 bcf, while close to expectations of a -82 bcf decline, were well below the 5-year average decline for this time of year at -101 bcf.  Losses in nat-gas prices were limited after forecaster Atmospheric G2 said colder-than-average weather is expected over a large portion of the Lower 48 states over the next ten days.

A bearish factor for crude was today's Chinese economic news that showed China Feb CPI and Feb PPI prices eased after the end of the Lunar New Year holiday, suggesting that an economic rebound driven by the ending of Covid restrictions may take longer than expected.   China Feb CPI rose +1.0% y/y, weaker than expectations of +1.9% y/y and the smallest pace of increase in a year.  Also, Feb PPI fell -1.4% y/y, weaker than expectations of -1.3% y/y and the largest decline in over 2 years.

Weakness in the crude crack spread is bearish for crude prices.  The crack spread today fell to a 1-week low, which discourages refiners from purchasing crude oil to refine it into gasoline and distillates.  

A negative factor for crude was the action by Chinese Premier Li Keqiang on Monday to announce a GDP growth target for China this year at around 5%, below expectations of above 5% and below the 2022 target of around 5.5%, which is bearish for energy demand.

In a bullish factor, Vortexa Monday reported that the amount of crude stored on tankers that have been stationary for at least a week fell -6.1% w/w to 80.8 million bbl in the week ended March 3.

Indian buyers of Russian oil are struggling to obtain the crude as onerous demands from financiers wary of breaching Western sanctions are making it hard for Indian buyers to secure financing for their purchases of Russian crude.  The inability to fund the purchases of Russian crude may force Indian buyers elsewhere to obtain crude supplies, which is bullish for oil prices.  

Rising crude demand in India, the world's third-largest crude consumer, is bullish for prices.  India's oil ministry predicts India's oil-products consumption will climb by +4.9% y/y to a record 233.8 MT in the 12 months from April.  

On February 1, the OPEC+ Joint Ministerial Monitoring Committee recommended keeping crude production levels steady as the oil market awaits clarity on demand in China and crude supplies from Russia.  Goldman Sachs predicts that OPEC+ will only start to reverse its supply cuts, currently at about 2 million bpd, in the second half of this year when accelerating demand will tighten the market.  OPEC crude production in February rose by +120,000 bpd to 29.24 million bpd.

Wednesday's EIA report showed that (1) U.S. crude oil inventories as of March 3 were +7.8% above the seasonal 5-year average, (2) gasoline inventories were -4.2% below the seasonal 5-year average, and (3) distillate inventories were -8.1% below the 5-year seasonal average.  U.S. crude oil production in the week ended March 3 fell -0.8% w/w to 12.1 million bpd, which is only 1.0 million bpd (-6.9%) below the Feb-2020 record-high of 13.1 million bpd.

Baker Hughes reported last Friday that active U.S. oil rigs in the week ended March 3 fell by -8 rigs to a 5-3/4 month low of 592 rigs, moderately below the 2-1/2 year high of 627 rigs posted on December 2.  U.S. active oil rigs have more than tripled from the 17-year low of 172 rigs seen in Aug 2020, signaling an increase in U.S. crude oil production capacity.

• Crude Settles Moderately Lower on Dollar Strength and a Hawkish Fed
• Crude Declines on Concern a Hawkish Fed Will Curb Energy Demand
• Crude Falls Sharply on Dollar Strength and Interest Rate Concerns
• Crude Sinks on Dollar Strength and Interest Rate Concerns