Written Commentary
CRUDE OIL
Reports this morning that Kazakhstan’s oil and gas condensate output has averaged a record 2.16 million barrels per day so far this month, up from 2.12 million in February, undercuts OPEC+’s attempts to rein in production. Apparently Kazakhstan is having a difficult time in convincing Chevron and Exxon Mobil to hold back after those companies invested heavily in new capacity over the past couple of years. OPEC+ announced quotas announced yesterday for seven members to compensate for overproducing. Yesterday the US government issued more Iran-related sanctions, targeting a Chinese “teapot” refinery for the first time. This was the fourth round of sanctions on Iran’s oil sales since February. China’s fuel oil imports rose 6.8% in the first two months of 2025 from the same period last year, but that may not necessarily indicate stronger demand but instead may be because dealers are pushing deliveries ahead of increases in import taxes. A Kremlin spokesman said today that Putin’s order for Russian forces to temporarily halt their attacks on energy infrastructure in Ukraine remains in force. However, an explosion at a natural gas pumping station near the border with Ukraine overnight throws some doubt on the matter.
NATURAL GAS
May Natural Gas was lower overnight on follow-through selling from yesterday, but it has bounced off the lows off news that a Russian gas pumping and measuring station near the border with Ukraine was on fire after a major explosion. The facility was once used by Gazprom to export gas via Ukraine to Europe and is in an area recaptured by Russian forces this week. Some Russian media accused the Ukrainian military of attacking the facility, but the Ukrainian military has denied that. Russia and Ukraine had both said they would refrain from attacks on each other’s energy infrastructure. This follows news yesterday that Turkey and Slovakia had received extensions from the United States to waivers for gas payments to Russia, and this dashes hopes of a potential reopening for Russian gas supply to Europe. The Weekly EIA gas storage report yesterday showed US supply had a net injection of 9 bcf last week, which was above trade expectations of -31 to +3. Storage is down 26.8% from a year ago and 9.6% below the five-year average. US Interior Secretary Doug Burgum announced steps to open up more acreage for oil and gas leasing and lift restrictions on building an LNG pipeline and mining road in Alaska.
PRODUCT MARKETS
May RBOB is lower this morning after a modest rally yesterday and overnight that took the market to its highest level this month. US gasoline stocks are above a year ago and above the five-year average, which may make it difficult for the market to mount much of an upside mood unless it gets help from the complex overall. Look for support at 2.1507 and 2.113, with resistance at 2.2219 and 2.2405. Distillate stocks are the lowest for this point in the season 2022 and the second lowest in six years, but we are moving past key heating demand season. The 6-10 and 8-14-day forecasts do show below normal hanging around the Northeast, which could bring some late season demand.
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