Written Commentary
NATURAL GAS
June Natural Gas has bounced from oversold levels, perhaps because the mild weather theme has played itself out and perhaps on expectations that impending trade deals will include US LNG exports. The 6-10 and 8-14 day forecasts show above normal temperatures in across much of the lower 48, with the exception of below normal in the southern California, the Southwest, Texas, and southern Florida and normal along the Pacific Coast. This is slightly cooler than last week. For the EIA storage report tomorrow, the early Reuters poll calls for a net injection of 93 to 118 for the week ending April 25, which seems high against the five-year average of +55 bcf for the week, as well as the five-year range of +15 to +77. Earlier this week, Australia’s Woodside Energy gave final approval to build a $17.5 billion LNG project in Louisiana. This is the first LNG project to be announced in the US since Trump lifted the moratorium imposed by the Biden administration.
CRUDE OIL
June Crude extended this week’s selloff overnight and fell to its lowest level since April 11. The trade seems to be waiting for some sort of trade agreement (or agreements) to be announced with various trade partners on hopes that it would stem fears of a global economic slowdown (not that one is imminent). The decline in US consumer confidence to its lowest level since the pandemic does not help demand ideas. Reports from Reuters indicated that API crude oil stocks were +3.8 million barrels last week versus expectations for +400,000 (based on a Reuters poll). Gasoline inventories were -3.1 million barrels versus -1.0 million expected, and distillate stocks were -2.5 million versus -1.6 million expected. The EIA report this morning will complete the picture. Refinery runs are expected to be up 0.1% to 88.2%. Reuters also reported that Kazakhstan oil production totaled 1.814 million barrels per day during April 1-28, down 3% from March but still well above its quota of 1.473 million. Kazakhstan has been running well ahead of their quota, much to the chagrin of Saudi Arabia and other producers. This has led to speculation that OPEC+ may lift its quotas significantly in June, as it did in May, when they added 411,000 barrels per day to their allowed production. The group is scheduled to meet on May 5 to discuss quotas for June.
PRODUCT MARKETS
API Gasoline stocks were -3.1 million barrels last week versus -1.0 million expected, and distillate stocks were -2.5 million versus -1.6 million expected. The EIA report this morning will complete the picture.
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