Energy Prospectus

Opening Prices:
> WTI is down 5c to $63.41/Bbl, and Brent is up 8c to $67.02/Bbl.
> Natural gas is up 3.1c to $2.689/MMBtu.

AEGIS Notes
Oil

China refineries running at near-record levels as demand recovery takes hold
Chinese refineries processed 14.14 MMBbl/d in March, a 20% year-over-year increase
The country has seen record economic growth in 1Q2021, posting a year-over-year % increase of 18.30%; Though, we note this number may be skewed as the country was dealing with lockdowns and economic declines a year ago

India’s COVID resurgence hammers fuel sales as lockdowns spread (Bloomberg)
Gasoline demand in India fell by about 5% from April 1 – 15, according to Bloomberg
LPG and Jet fuel are both on track for month-over-month declines of 6.4% and 7.6%
Strong buying in the Asian physical crude market bodes well for improved demand (Bloomberg)

Rongsheng Petrochemical co. snapped up over 7 MMBbls of crude for delivery from June-July, up 2 MMBbls from March, for its largest monthly volume purchased since October. The purchases are an encouraging sign for the spot market, as it struggled in March as U.S.-sanctioned Iranian crude flooded the market, while demand weakened.

Natural Gas

Natural gas in underground storage rose by 61 Bcf for the week ended April 9. The increase far surpassed the five-year average build of 26 Bcf, according to EIA data
The reason for the large injection for this time of year was lower demand caused by an average US pop-weighted temperature of 59 °F. The previous five years have averaged 52.1 °F, or 13% cooler.
AEGIS notes that yesterday’s gas stat may have looked like an unseasonably high injection; however, when adjusting for last week’s abnormally warm weather, the stat implied a tight S&D balance or under-supplied market
Natural gas prices rose on Thursday as the average analyst estimate was calling for a 67 Bcf increase in storage

Global gas demand to increase by 3.2% year on year in 2021, enough to more than offset the lost consumption in 2020, the International Energy Agency said in its quarterly report (Platts)
“We expect globally to see a rebound, sufficient in our view not only to offset last year but also to provide some growth compared with 2019,” IEA senior analyst Jean-Baptiste Dubreuil said
The IEA also said gas imports into Europe are expected to increase by about 10% in 2021, with a need to replenish storage. LNG imports by Europe are projected to remain close to their 2019 record levels, according to the agency’s report

By FxPro Financial Services Ltd
Commodities4 hours ago (Apr 16, 2021 05:13AM ET)

Since the beginning of April, the dollar's continued weakening seems to be moving beyond monthly or quarterly rebalancing. US equity indices are rewriting all-time highs, and emerging market currencies are rising at an accelerated pace. These are all clear demonstrations of the recovery in demand for risky assets.

Markets are paying more attention to the recovery of activity in North America and several countries in Europe, where easing of restrictions and recovery of demand for commodities and energy are looming.

WTI managed to break its upper boundary

Although the world's third wave of coronavirus is already comparable to the second one by new daily cases, with India, Brazil, Turkey and several other major emerging economies taking the brunt of it, it remains outside the focus of markets, pushing commodity prices higher.

And throughout this week, this demand was actively manifested in investor interest in oil and gold.

WTI crude oil is trading at $63.77 at the start of trading in Europe. Its price since the second half of March was hovering in the range of $57-62. This week it managed to break its upper boundary. The report on US oil inventories was a growth driver, noting the reduction in inventories to last week's level and the level of exactly one year ago. This was further evidence of a return to normalcy in the oil market, which triggered a 4% jump in prices and has supported buying since then. < With U.S. refinery utilization now up to 85% and rising, further declines in U.S. crude oil inventories are anticipated.

Brent can retest the $70 resistance within this growth impulse

The next milestone on the upside is seen in the $66-67 area, where the price reversed to a correction in March. Having broken out of the $60-65 range, Brent can retest the $70 resistance in the following few trading sessions.