April WTI crude oil (CLJ23) this morning is down -0.65 (-0.85%), and Apr RBOB gasoline (RBJ23) is down -4.06 (-1.53%). Â April Nymex natural gas (NGJ23) is up +0.163 (+6.71%).
Crude oil and gasoline prices this morning are moderately lower, with crude falling to a 5-week low and gasoline dropping to a 2-week low. Â Energy prices are under pressure today as turmoil in the U.S. banking sector has investors liquidating risk assets and fleeing to the haven of government debt and precious metals. Â However, crude recovered from its worst levels after the dollar index (DXY00) fell to a 3-week low, and stocks rebounded from early losses and moved higher.
Apr nat-gas prices this morning are sharply higher on the outlook for strong domestic and export demand. Â Forecaster Atmospheric G2 said a cold blast across most of the Lower-48 states from March 18-22 will boost heating demand for nat-gas. Â Also, U.S. nat-gas export demand is strong after BNEF reported that estimated gas flows to U.S. LNG export terminals today are at 13.5 bcf, up +7.8% w/w.
A negative factor for crude was JPMorgan Chase's projection that Q1 China fuel demand would be less than forecast due to lower-than-expected international travel from China. Â China's international travel is only 23% of 2019's average since reopening in early Jan.
In a bullish factor, Vortexa today reported that the amount of crude stored on tankers that have been stationary for at least a week fell -9% w/w to 73.62 million bbl in the week ended March 10.
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 Russian oil purchases. Â The difficulty of funding the Russian oil purchases may force Indian buyers elsewhere to obtain crude supplies, which is bullish for oil prices. Â
Rising crude demand in India, the world's third-largest crude consumer, is bullish for prices. Â 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. Â
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. Â 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. Â OPEC crude production in February rose by +120,000 bpd to 29.24 million bpd.
Last 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. Â 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 10 fell by -2 rigs to an 8-3/4 month low of 590 rigs, moderately below the 2-1/2 year high of 627 rigs posted on December 2. Â 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.
More Energy News from Barchart
- Commodities: Running the Option Play
- Energy and Gold Stocks Attracting Investor Attention as Financials Take Hit
- Gasoline- The NYMEX Futures Tend to Reflect Peak Season Demand in Early Spring
- Nat-Gas Tumbles on Warmer U.S. Temps and Robust U.S. Nat-Gas Inventories
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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