Crude Climbs on Strong Crude Demand in India

May WTI crude oil (CLK23) this morning is up +0.58 (+0.83%), and May RBOB gasoline (RBJ23) is up +4.47 (+1.78%).  April Nymex natural gas (NGJ23) is down -0.113 (-4.81%).

Crude oil and gasoline prices this morning are moderately higher.   Dollar weakness is supporting energy prices after the dollar index fell to a 5-week low today.  Also, the strength in crude oil demand from India, the world's third-largest crude consumer, is bullish for prices.  Crude prices maintained moderate gains on today's mixed EIA inventory report.  

Apr nat-gas this morning is sharply lower on larger-than-normal U.S. nat-gas inventories and high production levels.   U.S. nat-gas inventories were +23.7% above their 5-year average as of March 10, the most in more than 6-1/2 years.  Also, U.S. lower-48 state dry gas production today is seen at 100.3 bcf, up +5.2% y/y.

Rising crude demand in India is bullish for oil prices.  India's oil ministry today reported that India Feb crude oil imports rose +8.5% y/y to 19.1 MMT, the most in seven months.

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.

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.

Today's weekly EIA report was mixed for energy prices.  On the bullish side,  EIA gasoline stockpiles fell -6.40 million bbl, a larger draw than expectations of  -2.36 million bbl.  Also, EIA distillate supplies fell -3.31 million bbl, a larger draw than expectations of -1.5 million bbl.  In addition, crude stockpiles at Cushing, the delivery point of WTI futures, fell -1.06 million bbl.  On the bearish side, EIA crude inventories unexpectedly rose +1.12 million bbl to a 1-3/4 year high versus expectations of a decline of -1.8 million bbl.

Today's EIA report showed that (1) U.S. crude oil inventories as of March 17 were +7.6% above the seasonal 5-year average, (2) gasoline inventories were -4.0% below the seasonal 5-year average, and (3) distillate inventories were -8.8% below the 5-year seasonal average.  U.S. crude oil production in the week ended March 17 rose +0.8% w/w to 12.3 million bpd, matching a 2-3/4 year high and only 0.8 million bpd (-6.1%) 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.
 

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