Written Commentary
CRUDE OIL
May Crude Oil was lower overnight as the market gave back more of its gains from Monday’s breakout rally as it awaits the Trump Administration’s announcement on tariffs this afternoon. There are concerns that a trade war could pressure oil demand, but expectations vary regarding the level of tariffs that will be announced. Some have suggested the rate could be 20% across the board, which may be a relief after some expectations for 25%. The API report yesterday was bearish for crude and ULSD and neutral for RBOB. The EIA report this morning will present the final word on the subject, but the anticipated tariff announcement may diminish the impact. According to API, crude stocks were +6 million barrels last week versus expectations for -2.1 million. Gasoline stocks were -1.6 million versus -1.7 million expected, and distillates were -10,000 versus -1.0 million expected. OPEC+ ministers are expected to meet online tomorrow to approve a 135,000 bpd production increase in May, but the group is also expected to discuss additional cuts for some members who have been pumping above their quotas. Venezuela’s exports of crude oil and fuel oil fell 11.5% in March, according to ship tracking data and documents. China and India have suspended cargoes for late March and April loading following the tariff announcements from the Trump administration.
NATURAL GAS
May Natural Gas was slightly higher overnight after a selloff yesterday. The market may have gotten overdone on a colder weather forecast that has emerged this week. The trade also awaits the tariff announcements that afternoon. US is the world’s largest exporter of LNG, and traders fear the high US tariffs could spark retaliation. On the other hand, buying more US LNG could offer nations an opportunity to balance their trade surpluses with the US, which could put them in a position to negotiate for lower tariffs. The EU needs to replenish its LNG supply after a hard winter. Supplies are the lowest since 2021/22. The 6-10-day forecast showed chances for much below normal temperatures in the eastern half of the nation but less extreme in the 8-14 day. The west looks warm. For the EIA storage report this week, the early Reuters poll calls for a net injection of 18-39 bcf.
PRODUCT MARKETS
Reuters reported that ae US oil and biofuel coalition meeting with the EPA pushed for biomass diesel mandates of 5.5-5.75 billion gallons, which would be up from the current 3.35 billion that the biofuel industry says is far below production capacity. The president has promised support of the biofuel industry, and this is viewed as the first test of that.
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