Written Commentary
CRUDE OIL
June Crude Oil is higher this morning after choppy trade overnight, perhaps due to a Bloomberg report that quoted an anonymous source as saying that China wants more respect from the Trump administration before it will agree to talks. The source was also quoted as saying that China also wanted the US to appoint a new primary contact in future talks. This may have viewed by some as at least an openness to talking. The market may have also drawn support from reports that China’s oil refineries increased the amount of oil they processed in March to 14.85 million barrels per day from 14.74 million in January-February. The daily processing rate was also the highest in a year. China’s GDP grew 5.4% year on year in the first quarter, beating the 5.1% expected in a Reuters poll. The API report yesterday was a bearish against expectations for crude oil at +2.4 million barrels last week versus +0.5 million expected. The report leaned bullish for the products, with gasoline stocks -3 million barrels versus -1.6 million expected and distillate stocks -3.2 million versus -1.2 million expected. The weekly EIA report will be released this morning. Refinery runs are expected to be +0.4% to 87.1%.
NATURAL GAS
June Natural Gas was slightly lower overnight but it held above yesterday’s low and above the 200-day moving average that it penetrated yesterday. EIA reported yesterday that US electricity generation from gas-fired power plants approached three-year low on Sunday as mild spring weather kept heating and cooling demand low and as renewable sources of energy produced more power. Wind, solar, and hydro have supplied about 35% of US power needs so far this week, with natural gas about 30%. EIA also projected the natural gas share of power generation to fall to 40% in 2025 and 2026 from 42% in 2024. Thailand’s Finance Minister said today that his nation plans to import more LNG from the US over the next five years. They plan to meet with US officials next week to discuss the tariffs. They already have an agreement to import 1 million metric tons next year as part of a 15-year plan totaling 15 million tons, and they are planning an additional contract for more than 1 million tons over the next five years. This comes on top of reports that Indonesia, Pakistan, and Vietnam are interested as well. They all seem to be playing the LNG card in an attempt to negotiate lower rates. For tomorrow’s EIA storage report, the early Reuters poll as an average expectation for US natural gas storage to show a net injection of 17-33 bcf last week.
PRODUCT MARKETS
The API report leaned bullish for the products, with gasoline stocks -3 million barrels versus -1.6 million expected and distillate stocks -3.2 million versus -1.2 million expected.
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