Written Commentary
NATURAL GAS
May natural gas prices registered a bearish outside day reversal yesterday after failing to overcome $1.90 resistance. Talk of a warmer tone to near term weather maps took out some of the short-term demand impetus. Reports of lower natural gas prices attracting Asian demand, especially for LNG, could help stabilize prices over the near term. Maintenance issues at the Freeport LNG terminal that will restrict their exports until May offers a headwind, as does weather forecasts for the start of April that trended warmer for the eastern part of the country. Expectations for this morning’s EIA storage report are for an injection in the range of 5 bcf, which compares to the five-year average draw for this week of the year of 42 bcf.
CRUDE OIL
The outside market tone is generally supportive for crude oil in the early going, as markets digest central bank policy decisions, economic data and the latest EIA inventory figures. May crude oil caught a modest bid yesterday afternoon following the Fed meeting decision that sent global equity markets higher and weighed on the US dollar. The boost in risk-taking sentiment, along with EIA inventory readings that showed a larger than expected draw in US crude supplies injected support under the market and helped shake off yesterday’s oil market selloff to $81.00. However, seeing the Swiss National Bank surprisingly cut interest rates earlier this morning, along with a round of softer European purchasing manager data puts a bid back into the US dollar, and that’s keeping the crude oil market on the defensive. However, a host of intermediate term fundamentals support the bull case, including a cutback in Iranian and Saudi Arabian export flows, potential for more Ukrainian drone attacks on Russian oil refining capacity and talk that Israel’s Netanyahu is preparing forces for an invasion into Rafah. Additionally, reports that BP’s Whiting, IN refinery is back online and near maximum capacity stokes demand for US oil supplies.
PRODUCT MARKET FUNDAMENTALS:
May RBOB prices are in the process of erasing yesterday’s Fed induced bounce as they dance around the $2.71 area. Positive fundamentals facing RBOB include US inventory levels at a seasonal low and increased Russian demand for US supply. However, reports that BP’s Whiting refinery is back online and operating near maximum capacity is expected to boost short term gasoline and distillate supplies. US gasoline supplies declined for the seventh consecutive week and are at their lowest levels in three months.
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