May WTI crude oil (CLK23) this morning is down -0.22 (-0.26%), and May RBOB gasoline (RBJ23) is down -2.17 (-0.76%). May Nymex natural gas (NGK23) is down -0.057 (-2.72%).
Crude oil and gasoline prices this morning are moderately lower. Crude prices are under pressure after today's larger-than-expected increase in weekly jobless claims intensified concerns that the U.S. economy is slowing. Losses in crude are limited by tightness in global oil supplies, stronger Chinese energy demand, and a fall in the dollar index today to a 10-week low.
May nat-gas this morning is moderately lower on the outlook for ample U.S. nat-gas supplies. Today's weekly EIA nat-gas inventories rose +25 bcf, right on expectations, which left U.S. nat-gas stockpiles +18.9% above the 5-year seasonal average.
Weakness in the crude crack spread is bearish for oil prices. The crack spread today fell to 1-week low, discouraging refiners from purchasing crude to refine into gasoline and distillates.
Strength in Chinese crude demand is bullish for prices. China's General Administration of Customs reported today that China's Mar crude imports rose +16% m/m to 52.31 MMT (12.37 million bpd), the highest level since June 2020. China's crude imports year-to-date are up +6.7% y/y at 136.369 MMT.
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 last Monday 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.
In a bearish factor, Vortexa reported Monday that the amount of crude stored on tankers that have been stationary for at least a week rose +6.8% w/w to 112.83 million bbl in the week ended April 7.
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 April 7 were +2.8% above the seasonal 5-year average, (2) gasoline inventories were -6.9% 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 7 rose +0.8% w/w to 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 Thursday that active U.S. oil rigs in the week ended April 7 fell by -2 rigs to 590 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.
