Although temperature wise it does not feel like spring on the calendar is. Today we have reports on Milk Production at 2:00 P.M. Central and API Energy Stocks at 3:330 P.M. We also have FED meetings today and tomorrow. The April Crude Oil expires today. On the Corn front the May Corn is currently trading at 374 ¾ which is ¼ of a cent lower. The trading range has been 377 to 374 ¾. News reports from Michael Hogan with Thomson Reuters in Hamburg, that the European Union’s proposal to impose duties on modest U.S. Corn imports that would not cause major pain for European imports or U.S. exporters, experts said on Monday, as Brussels draws up a response to Washington’s plan for tariffs on Metals. This could leave the EU importers from facing strong competition as they seek alternative supplies in the coming months due to heavy buying by China, and problems with crops in South America which is a major producer of Corn.
On the Ethanol Front China’s top independent oil refiner is buying Ethanol and two others are seeking government approval to blend the biofuel into their gasoline ahead of the 2020 deadline to add it to the nation’s fuel supply according to Reuters. China mandated last September that Gasoline should contain 10% Ethanol, an alcohol that is produced from Corn known as e10. In the overnight electronic session the April Ethanol is currently trading at 1.470 which is .007 higher. The trading range has been 1.472 to 1.469. 6 contracts traded and Open Interest at 1,022 contracts. The market is currently showing 4 bids @ 1.463 and 1 offer @ 1.469.
On the Crude Oil front the market is back shrugging off the big selloff in the Stock Market yesterday. Saudi Aramco is scaling back its ambitions for a public offering for the Oil giant only to be listed on the Saudi stock exchange. In the overnight electronic the May Crude Oil is currently trading at 6326 which is 113 points higher. The trading range so far has been 6133 to 6213.
On the Natural Gas front the market is trading a tad higher mostly due to cooler March temperatures and the possibility of another snow. The April Natural Gas is currently trading at 2.653 which is 2 tics higher. The trading range has been 2.667 to 2.650.
— Daniel Flynn
The Energy Report: Petroleum springs ahead
Springtime seasonal in oil is being fed by a multitude of factors. Record gasoline demand, falling Venezuelan production, rising tensions between Iran, Saudi Aribia and the rest of the world is underpinning oil and oil product prices today. President Trump is meeting with Saudi Crown Price Mohammed Bin Salman and the market is assuming that means that the U.S. and Saudi Arabia will take a tougher stance against Iran.
The rest of the world is also tiring of Iran, Saudi and the way they are waging the proxy war in Yemen showing little regard for civilian causalties in what the United Nations is calling “the worst man-made humanitarian crisis of our time”. The war has been with many atrocities and the players have broken down into multiple factions.
President Trump will push the Saudi Crown Prince to try to find a way to end the conflict, yet at the same time work together to push back on Iran’s nuclear ambitions and crack down on their involvement in the war in Syria. Saudi Crown Prince Mohammed bin Salman said that Saudi Arabia would develop nuclear weapons if Iran did.
This comes as private forecaster reports that supply from the Cushing Oklahoma delivery point fell 326.000 barrels from Tuesday to Friday. That drop is reflective of strong demand. We also are seeing less of an impact from shale production on oil inventories that oil bears keep hoping for.
AAA reported that consumer gasoline demand is at the highest level on record for March. According to the Energy Information Administration’s (EIA) latest report, demand measured at 9.6 million b/d – levels typical of summer months, not the first quarter of a year. U.S. exports continue to trend high, accounting for a large chunk of this week’s demand data.
“As demand strengthened, gasoline inventories declined, pushing the national gas price average two cents more expensive on the week to $2.55,” said Jeanette Casselano, AAA spokesperson. “As a result, most motorists are seeing more expensive gas prices at the start of this work week.” Today’s national gas price average of $2.55 is two cents more than a month ago and more than a quarter (26 cents) higher than this time last year. Gas Buddy is also warning of an impending price spike at the pumps in the coming days. Make sure you go fill up soon.
Hedgers hopefully locked in prices as we see significant upside price risk still. The IEA, as reported by Reuters, said last week that Venezuela, where an economic crisis has cut oil production by almost half since early 2005 to well below 2 million barrels per day (bpd) PRODN-VE, was “clearly vulnerable to an accelerated decline”, and that such a disruption could tip global markets into deficit.
Endless winter is giving natural gas a bit of a bounce after yesterday’s sells off. We still think Nat gas prices are headed lower soon. Big Picture the big news from the Energy Information Administration that said the United States exported more natural gas than it imported in 2017, marking the first time since 1957 that the United States has been a net natural gas exporter. The transition to net exporter occurred as natural gas production in the United States continued to grow, reducing pipeline imports from Canada and increasing exports, both by pipeline and as liquefied natural gas (LNG).
— Phil Flynn
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