May WTI crude oil (CLK23) this morning is down -0.14 (-0.17%), and May RBOB gasoline (RBJ23) is down -0.17 (-0.06%). May Nymex natural gas (NGK23) is down -0.065 (-3.02%).
Crude oil and gasoline prices this morning are slightly lower. A stronger dollar today is undercutting energy prices. Also, signs of softness in the U.S. labor market point to a bearish economic slowdown for energy demand and crude prices after weekly jobless claims rose more than expected. Limiting losses is a positive carryover from Wednesday, when the weekly EIA inventory report showed crude oil inventories fell more than expected.
May nat-gas prices this morning are moderately lower as updated weather forecasts call for unusually mild U.S. weather for mid-April, reducing heating demand for nat-gas. Maxar Technologies said above-normal temperatures are expected in the eastern two-thirds of the U.S. from April 11-20. Nat-gas prices maintained their losses after the EIA reported that weekly U.S. nat-gas inventories fell -23 bcf, right on expectations.
Signs of weakness in the U.S. economy are negative for energy demand and crude prices. Today's weekly jobless claims report showed weekly initial unemployment claims fell -18,000 to 228,000, showing a weaker labor market than expectations of 200,000. Also, weekly continuing claims rose +6,000 to a 15-month high of 1.823 million, showing a weaker labor market than expectations of 1.700 million.
A report today from the International Monetary Fund (IMF) was bearish for energy demand and crude prices as the IMF warned that the outlook for global economic growth over the next five years is the weakest since 1990.
Another bearish factor for crude prices is the resumption of Iraqi crude exports from the Turkish port of Ceyhan. On Tuesday, the Iraqi government and Kurdish officials said they would sign an agreement to allow the resumption of 400,000 bpd of oil exports from the Turkish port of Ceyhan. The crude exports were halted last week 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 Monday after OPEC+ on Sunday 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 -80,000 bpd to 29.16 million bpd.
The outlook for stronger Chinese crude oil demand is bullish for prices. China National Petroleum Corp, the country's largest refiner, predicts that oil demand in China may expand this year by +5.1% to 756 MMT as the country emerges from the pandemic. However, oil demand in China has recently been weak. 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 Monday reported that the amount of crude stored on tankers that have been stationary for at least a week rose +5.4% w/w to 104.60 million bbl in the week ended March 31.
Rising crude demand in India is bullish for oil prices. India's oil ministry reported on March 22 that India Feb crude oil imports rose +8.5% y/y to 19.1 MMT, the most in seven months.
Wednesday's EIA report showed that (1) U.S. crude oil inventories as of March 31 were +4.1% above the seasonal 5-year average, (2) gasoline inventories were -6.4% below the seasonal 5-year average, and (3) distillate inventories were -11.4% below the 5-year seasonal average. U.S. crude oil production in the week ended March 31 was unchanged at 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 last Friday that active U.S. oil rigs in the week ended March 31 fell by -1 rig to 592 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.
