June WTI crude oil (CLM23) on Friday closed up +2.02 (+2.70%), and June RBOB gasoline (RBM23) closed up +3.74 (+1.50%).
Crude oil and gasoline prices Friday posted moderate gains on tight global supplies and strength in energy demand. U.S. gasoline demand in the week ended April 21 rose +11.6% w/w to 9.511 million bpd, the highest in 16 months. Also, India's Mar crude imports rose +7.9% y/y to 20.5 MMT. Friday's rally in the S&P 500 to a 1-1/2 week high shows confidence in the economic outlook that is bullish for energy demand and crude prices.
Friday's global economic news was mixed for crude prices. On the positive side, U.S. Mar personal spending was unchanged m/m, stronger than expectations of -0.1% m/m. Also, the U.S. MNI Apr Chicago PMI unexpectedly rose +4.8 to an 8-month high of 48.6, stronger than expectations of a decline to 43.6. In addition, Japan Mar retail sales rose +0.6% m/m, stronger than expectations of +0.3% m/m. On the negative side, Eurozone Q1 GDP rose +0.1% q/q and +1.3% y/y, slightly weaker than expectations of +0.2% m/m and +1.4% y/y. Also,
Strength in energy demand in India, the world's third largest crude consumer, is bullish for prices after India's Ministry of Petroleum and Natural Gas reported India's Mar crude processing rose +3.1% y/y to 23 MMT. Also, India's Mar crude imports rose +7.9% y/y to 20.5 MMT.
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.
In a bullish factor, Vortexa reported Monday 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.
Wednesday's EIA report showed that (1) U.S. crude oil inventories as of April 21 were -0.5% below the seasonal 5-year average, (2) gasoline inventories were -7.2% below the seasonal 5-year average, and (3) distillate inventories were -12.4% below the 5-year seasonal average. U.S. crude oil production in the week ended April 21 fell -0.8% w/w to 12.2 million bpd, only 0.9 million bpd (-6.9%) below the Feb-2020 record-high of 13.1 million bpd.
Baker Hughes reported Friday that active U.S. oil rigs in the week ended April 28 were unchanged at 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.
