Written Commentary
CRUDE OIL
Crude Oil prices are slightly higher this morning, as the market is somewhat relieved that the threatened 50% US tariffs on Canadian steel were pulled back late in the session yesterday. The market remains jittery off the uncertainty of demand, and the CPI number this morning could further raise concerns, especially if comes in hot, as the trade could worry that the Fed could be limited on its moves should the economy falter. In their Short Term Energy Outlook, EIA said global oil markets would remain relatively tight through the middle of this year before gradually shifting to inventory builds. They expect global inventories to fall in the second quarter in part due to decreasing crude oil production in Iran and Venezuela. They also cited increased uncertainty OPEC+ planned production increases. Yesterday’s API report showed US crude oil stocks were +4.2 million barrels for the week ended March 7 versus an average trade expectation of +2.0 million. API Distillate stocks were +420,000 barrels versus -800,000 million expected, and gasoline stocks were -4.6 million versus -1.9 million expected. The EIA report is our this morning. Refinery runs are expected to be +0.5% to 86.45.
NATURAL GAS
May Natural Gas is lower today, continuing a selloff from Monday’s spike to contract highs. The 6-10 and 8-14-day forecasts still show above normal temperatures dominating the east of the Rockies and below normal temps in the west, which will pressure demand. The Midwest and mid-South are expected to see some severe weather this week, with thunderstorms, tornadoes and possible power outages. There could also be heavy snow in a narrow band in the eastern Dakotas and western Minnesota, which could boost heating demand a bit. For the EIA storage report this week, the Reuters calls for a draw of 36 to 79 bcf for the week ending March 7. The five-year average change for the week is -79 bcf. In their Short Term Energy Outlook, EIA increased their forecast for overall electricity generation over the next two years, which would put storage 4% lower in 2025 and 3% lower in 2026 compared with what they had forecast last month.
PRODUCT MARKETS
Product prices are slightly higher this morning in line with crude oil, with gasoline getting a bigger lift off a supportive API report late yesterday. The report showed with distillate stocks +420,000 barrels versus -800,000 million expected and gasoline stocks -4.6 million versus -1.9 million expected. The EIA’s Short Term Energy Outlook stated that closures of two US refineries in 2025 are likely to decrease the production of products over the next two years. It also called for US distillate consumption to increase because of increasing industrial activity and growing imports of goods into the United States related to a strengthening US dollar, which support demand for diesel fuel for on-highway trucking.
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