May WTI crude oil (CLK23) this morning is up +1.60 (+2.31%), and May RBOB gasoline (RBJ23) is up +3.88 (+1.52%). April Nymex natural gas (NGJ23) is down -0.115 (-5.19%).
Crude oil and gasoline prices this morning are moderately higher. A weaker dollar this morning is bullish for energy prices. Also, easing banking sector concerns has sparked a rally in asset prices after U.S. authorities said they were considering expanding a lending facility to help regional banks shore up their balance sheets.
Apr nat-gas this morning tumbled to a 5-week low and is sharply lower. Ample U.S. nat-gas supplies and ramped-up production are weighing on prices. U.S. nat-gas inventories are +22.7% above their 5-year average as of March 17, and BNEF data shows lower-48 U.S. nat-gas production today at 100.1 bcf, up +5.1% y/y. In addition, nat-gas prices are under pressure as the ongoing delay to restart full operations at the Freeport LNG export terminal may boost U.S. nat-gas stockpiles as exports are curtailed.
The outlook for stronger Chinese crude demand is bullish for prices. China National Petroleum Corp, the country's largest refiner, predicts that apparent oil demand in China may expand by +5.1% to 756 MMT this year as the country emerges from the pandemic.
China's economic recovery from the pandemic has been slow to materialize and is negative for energy demand and crude prices. China car sales in Jan-Feb fell -9.4% y/y, and international flights from China were at only 22% of pre-pandemic levels as of March 16.
In a bearish factor, Vortexa today reported that the amount of crude stored on tankers that have been stationary for at least a week rose +6.9% w/w to 96.53 million bbl in the week ended March 24.
Rising crude demand in India is bullish for oil prices. Last Wednesday, India's oil ministry reported that India Feb crude oil imports rose +8.5% y/y to 19.1 MMT, the most in seven months.
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 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 24 rose by +4 rigs to 593 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.
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.
