Written Commentary
CRUDE OIL
April Crude Oil is lower this morning on a number of factors, including prospects of increased supply on the global market and concerns about lower demand in the face of new tariffs. Yesterday came news that OPEC+ had decided to go ahead with their planned production increases in April after postponing the action several times last year. The group is currently holding 5.85 million barrels per day. This April increase would amount to 130,000 barrels per day, but the group plans to eventually unwind 2.2 million barrels per day of cuts. The US is reportedly drawing up a plan to give Russia sanctions relief as President Trump seeks to restore ties with Moscow and stop the war in Ukraine. The White House has asked the State and Treasury Departments to draft a list of sanctions that could be eased for US officials to discuss with Russian representatives in the coming days. Trump’s his plans to cut Iran’s oil exports to zero and the cancellation last week of a Chevron license to operate in Venezuela provide some offset to the increased supply potential. The tariffs raise concerns about global economic heath and oil demand.
NATURAL GAS
April Natural Gas is higher this morning, and it has taken out the two-year high from last month. The tariffs going into effect today would impact gas supply from Canada, which implies higher prices in the US. Last week’s EIA report showed that as of February 21, US storage was 23% below a year ago and 11% below the five-year average. For this EIA report this week, the early Reuters poll shows an average expectation for a net draw of 89 to 101 bcf for the week ending February 28. The weather forecast shows a mix of above or much above normal temperatures in the central and eastern US with much below normal temps expected in the western third of the lower 48, which is a mixed picture for seasonal demand.
PRODUCT MARKETS
April RBOB is lower this morning but is under less pressure than crude oil, and ULSD is higher, as the tariffs on Canadian and Mexican imports will increase the cost of crude oil that US refiners depend upon.
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