Written Commentary
CRUDE OIL
April Crude Oil is higher this morning but inside yesterday’s range. The API report yesterday afternoon was slightly bearish across the board, with US crude stocks +3.34 million barrels last week versus expectations calling for +2.2 million, gasoline stocks +2.83 million versus +800,000 expected, and distillate stocks -2.69 million versus -3.5 million expected. The EIA report will be released today at 11:00 AM Central, delayed by the holiday on Monday. Refinery operations are expected to be down 0.4% to 84.6%. Putin said yesterday it would be impossible to quickly restore the oil pipeline pumping facility that was attacked over the weekend due to the fact that Western equipment was damaged and Western sanctions prohibit the purchase of Western replacements. There were reports yesterday that Chinese refiners were buying Brazilian and west African crude oil in reaction to higher Mideast prices, China’s import tariffs on US crude, and the western sanctions on Russian oil. Turkey is awaiting confirmation from Iraq on the resumption of oil flows through the Iraq-Turkey pipeline.
NATURAL GAS
April Natural Gas is lower this morning after a rally to another new high for the move overnight. The nearby contract had reached its highest level since December 2022 before selling off. The market may have reached an exhaustion point after gaining 44% since the beginning of the month, but it still has today’s EIA storage report to contend with. For the report, trade expectations are calling for a withdrawal of 204 bcf to 153 for last week, citing to the recent cold weather in the US. The five-year average withdrawal for the week is 130 bcf. As of last week’s report, supply was down 9.3% from a year ago after being 1.1% higher at the beginning of the year. The 6-10-day forecast shows warmer than normal temperatures dominating the western half of the US, with mostly normal temps east, but the 8-14 day has colder than normal returning to the eastern half.
PRODUCT MARKETS
Last week, US distillate stocks were at six-year lows for this point in the season, as cold weather has boosted heating oil demand, and a sharply lower reading today could spark a move through last week’s high of 2.4652 in April ULSD .
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