Crude Oil Moderately Higher as Banking Turmoil Eases and the Dollar Falls

April WTI crude oil (CLJ23) this morning is up +0.56 (+0.83%), and Apr RBOB gasoline (RBJ23) is down -1.27 (-0.50%).  April Nymex natural gas (NGJ23) is down -0.043 (-1.93%).

Crude oil and gasoline prices this morning are mixed.  A slump in the dollar today to a 5-week low is bullish for energy prices.  Crude prices also rose on reassurances from the government that it will work to contain the banking crisis, which sparked a rally in stocks that boosted optimism in the economic outlook and energy demand.  Gains in crude were limited amid questions about the strength of China's economic recovery and ample global crude supplies.  

Apr nat-gas this morning dropped to a 1-month low on forecasts for above-average U.S. weather, along with a setback at the Freeport LNG export terminal, limiting U.S. LNG exports and allowing inventories to build.  Forecaster Atmospheric G2 said the southern and eastern U.S. states would see above-normal temperatures next week, which will curb heating demand for nat-gas.   Also, a technical hitch has pushed back the restart of full operations at the Freeport LNG export terminal, which may boost U.S. nat-gas stockpiles as exports are curtailed.

In a bearish factor, Vortexa Monday reported that the amount of crude stored on tankers that have been stationary for at least a week rose +2.6% w/w to 82.71 million bbl in the week ended March 17.

Goldman Sachs Monday cut its 12-month crude price forecast for Brent crude to $94 a barrel from a previous forecast of $100 a barrel, citing "banking stress, recession fears, and an exodus of investor flows."  Goldman now predicts that OPEC+ will start to reverse its supply cuts, currently at about 2 million bpd, in Q3 of 2024 versus a prior forecast of the second half of 2023.

A bearish factor for crude was last Wednesday's monthly report from the International Energy Agency (IEA) that said global crude supplies would "comfortably" exceed demand in the first half of this year.  The IEA reported that global oil inventories surged by 52.9 million bbl in Jan to 7.8 billion bbl, the highest in 1-1/2 years.

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.  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 10 were +6.9% above the seasonal 5-year average, (2) gasoline inventories were -2.5% below the seasonal 5-year average, and (3) distillate inventories were -7.8% below the 5-year seasonal average.  U.S. crude oil production in the week ended March 10 was unchanged at 12.2 million bpd, which is only 0.9 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 17 fell by -1 rig to a 9-month low of 589 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 Oil Recovers from Early Losses on Dollar Weakness
• Crude Prices Fall as Banking Turmoil Undercuts Economic Growth and Energy Demand
• Crude Oil Prices Retreat on Concern Bank Turmoil Will Spark Recession
• Crude Prices Slump on Concern Bank Turmoil Will Spark Recession