April Crude Moves To Highest Level Since Feb 3

CRUDE OIL 

April Crude Oil was lower overnight following yesterday’s move to its highest levels since February 3. The weekly API report released yesterday afternoon showed US crude oil stocks rose 9.4 million barrels last week, which was a bigger increase than expectations calling for a 3 million barrel increase, and that may have sparked the selling overnight. Gasoline stocks fell 2.51 million barrels versus +1.4 million expected, and distillates were down  590,000 versus and expected decline of 1.5 million. The EIA report will have the final say later this morning. Refinery runs are expected to be +0.3% to 84.8%. North Dakota oil output was estimated to have been down 60,000-90,000 barrels per day on Tuesday due to frigid temperatures and related operations challenges, according to the state pipeline regulator. The amount of Russian and Iranian crude oil held on ships has reportedly hit multi-month highs, as harsher US sanctions has reduced the number buyers. Estimates of the amount of Iranian floating storage range from 25-73 million barrels. This leaves fewer tankers available to ship crude oil, which may cause a bottleneck in Mideast oil. In their Short Term Energy Outlook, EIA said they expect OPEC+ production cuts to reduce global oil inventories and keep crude oil prices near current levels through the first quarter of 2025 but that gradual increases in production combined with relatively weak global oil demand growth will increase inventories in the second half of 2025 through 2026.

NATURAL GAS

March Natural Gas is near unchanged this morning, trading inside yesterday’s range up. Dutch and European prices are lower today on warmer forecasts in their 15-day outlook, but this is after they reached 2-year highs yesterday. Nebraska’s associated natural gas output was estimated down 0.17-0.26 billion cubic feet per day due to cold weather according to the North Dakota Pipeline Authority. In their Short-Term Energy Outlook, EIA said below-normal temperatures in much of the United States in January, particularly in the middle of the month, led to higher natural gas consumption, averaging 124.4 billion cubic feet per day, 12% more than the five-year average. They expect consumption through the end of the winter heating season (February and March) to decrease from January highs but to be more than the five-year average. They estimated withdrawals of natural gas from underground storage in January totaled nearly 1,000 Bcf, 39% more than the five-year average for January. In the week ending January 24, stocks fell by 321 Bcf, which was the fourth-largest weekly withdrawal from natural gas storage on record.  At least six Asian economies have expressed interest in buying liquefied natural gas (LNG) to narrow their trade deficit with the United States and fend off tariffs, while others look to expand and diversify supplies. These include Japan, South Korea, India, Taiwan, Bangladesh. Companies in the US, the world’s largest exporter of LNG, are pushing ahead with projects for new or expanded export capacity after the Trump administration lifted a moratorium on new LNG export permits. This could pave the way for almost 100 million metric tons per year of additional LNG exports by 2031.

PRODUCT MARKETS

April RBOB gave back some of its gains overnight despite a bullish API gasoline stocks number. The market is still in the vicinity of the six-month high from January 16 at 2.4070. April ULSD is near unchanged following a selloff overnight. The API numbers showed distillate stocks fell less than expected overnight, but the EIA report this morning may have the final word. Cold weather in the US supports heating oil demand.

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