June WTI crude oil (CLM23) this morning is up +0.03 (+0.04%), and June RBOB gasoline (RBM23) is up +1.18 (+0.46%). May Nymex natural gas (NGK23) is down -0.151 (-6.55%).
Crude oil and gasoline prices this morning recovered from early losses and are slightly higher after weekly EIA crude and gasoline inventories fell more than expected. Also, today's decline in the dollar index to a 1-1/2 week low is bullish for energy prices. Crude prices this morning initially fell to a 3-1/2 week low on concern that the lingering U.S. banking turmoil will drag down the economy and energy demand.
May nat-gas prices this morning are sharply lower as ample supplies and mild demand weighs on prices. Also, forecasts for above-normal U.S. temperatures that will curb heating demand for nat-gas are undercutting prices after Atmospheric G2 said above-normal temperatures over the interior West are seen spreading to the northern and central U.S. at the end of next week.
A positive factor for crude was today's hike by the German Economy Ministry of its 2023 German GDP forecast to +0.4% from a January forecast of +0.1%. Also, comments today from ECB Vice President Guindos were positive for energy demand when he said, "Growth in Q1, according to leading indicators, is going to be possible," and the Eurozone looks to avoid a recession that had been expected as recently as late last year.
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.
Today's weekly EIA inventory report was mostly bullish for crude and its products. EIA crude inventories fell -5.05 million bbl, a larger draw than expectations of -1.5 million bbl. Also, EIA gasoline stockpiles fell -2.41 million bbl versus expectations of -1.5 million bbl, as U.S. gasoline demand rose +11.6% w/w to 9.511 million bpd, the highest in 16 months. On the negative side, EIA distillate supplies fell -577,000 bbl, a smaller draw than expectations of -1.08 million bbl. Also, crude stockpiles at Cushing, the delivery point of WTI futures, rose +319,000 bbl.
Today'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 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.
