June WTI crude oil (CLM23) this morning is up +0.73 (+0.94%), and June RBOB gasoline (RBM23) is up +2.14 (+0.83%). May Nymex natural gas (NGK23) is up +0.014 (+0.63%).
Crude oil and gasoline prices this morning recovered from early losses and are moderately higher. A fall in the dollar index to a 1-week low today is bullish for energy prices. Also, signs of stronger Chinese fuel demand are positive for crude prices. Crude oil today initially moved lower on concern a slowdown in the U.S. economy will curb energy demand after the Apr Dallas Fed manufacturing activity index unexpectedly fell to a 9-month low.
May nat-gas this morning is moderately higher on the outlook for colder-than-normal U.S. temperatures that would boost heating demand for nat-gas. The Commodity Weather Group said below-normal temperatures are expected across the eastern half of the U.S. from April 29 to May 3. Record U.S. nat-gas production is limiting the upside in prices after lower-48 state U.S. dry gas production rose to an all-time high of 101.7 bcf on Sunday.
Signs of stronger Chinese fuel demand are positive for crude prices. China's CCTV reported that about 9 million passenger trips would be made during the week-long Golden Week holidays in China that starts April 29, up +30% from 6.9 million trips in 2019 before the pandemic.
Today's weaker-than-expected U.S. economic news signals a slowdown in the economy that is bearish for fuel demand. The U.S. Apr Dallas Fed manufacturing activity index unexpectedly fell -7.7 to a 9-month low of -23.4, weaker than expectations of an increase to -12.0.
In a bullish factor, Vortexa reported today that the amount of crude stored on tankers that have been stationary for at least a week fell -4% w/w to 98.69 million bbl in the week ended April 21.
The ongoing halt of Iraqi crude exports from the Turkish port of Ceyhan is tightening global oil supplies and is bullish for crude prices. The Turkish government said it wants to negotiate a $1.5 billion settlement that it has been ordered to pay before allowing Iraqi crude exports to resume through its pipeline. Oil exports of 400,000 bpd from the Turkish port of Ceyhan have been halted since March 25 after Iraq won an arbitration case from the International Chamber of Commerce that said Turkey violated a 1973 pipeline transit agreement by allowing crude from the Kurdish region to be exported without Iraqi government consent.
Crude prices surged on April 3 after OPEC+ announced a surprise oil production cut of more than 1 million bpd starting May 1. Saudi Arabia said the cuts were a "precautionary measure aimed at supporting the stability of the oil market." OPEC Mar crude production fell by -80,000 bpd to 29.16 million bpd.
Last Wednesday's EIA report showed that (1) U.S. crude oil inventories as of April 14 were +1.6% above the seasonal 5-year average, (2) gasoline inventories were -6.3% below the seasonal 5-year average, and (3) distillate inventories were -11.6% below the 5-year seasonal average. U.S. crude oil production in the week ended April 14 was unchanged w/w at 12.3 million bpd, 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 April 21 rose by +3 rigs to 591 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.
