Nearby Crude Oil Prices Extend Selloff

CRUDE OIL 

Nearby crude oil prices extended their selloff overnight and fell to their lowest level since April 2021. President Trump showed no signs of backing off from the tariffs over the weekend, and global stock markets extended their declines. Imports of oil, gas, and refined products were exempted from the tariffs, but the biggest concern is reduced demand if a trade war sparks a global recession. Saudi Arabia cut its oil prices to Asia for the month of May by $2.30 to plus-$1.20 against the Oman/Dubai average. This is their lowest level in four months and is the biggest one-month decline in more than two years. The trade had been looking for a decline of $1.80. Last week, OPEC+ decided to accelerate its plans to lift quotas and allow for another 411,000 barrels per day to return to production in May, up from +135,000 that had been previously planned. The Caspian Pipeline Consortium said on Friday that a Russian court ruled that its Black Sea export terminal facilities should not be suspended, a decision that could avert a potential fall in Kazakhstan’s oil production and supplies. Saudi Arabia and other OPEC members have been concerned about Kazakhstan exceeding its quotas in recent months. Last week, China announced that it will impose additional tariffs of 34% on all U.S. starting April 10, and other nations around the world are talking about retaliation. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 2,778 contracts of crude oil for the week ending April 1, increasing their net long to 94,622.

NATURAL GAS

May Natural Gas fell to its lowest level since February 14 overnight but is back near unchanged this morning. On Friday, Asian spot LNG prices remained at their lowest level in nearly six months, and China’s retaliatory tariffs announce on Friday further pressured demand expectations. Prices in Europe were lower overnight on a warmer weather trend and concerns about weaker energy demand ahead. The EU is preparing for countermeasures in response to the new tariffs, but they may not have much of a choice when it comes to buying LNG from the US, and they need rebuild supply this summer. The US 6-10 day forecast shows above normal temperature from the western Rockies eastward into western Indiana and Michigan, with below normal temps shrinking to an area covering eastern Appalachia and the eastern Seaboard. The 8-10 day showed above normal temperatures covering almost the entire lower 48. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 15,083 contracts of natural gas for the week ending April 1, reducing their net long to 25,071.

PRODUCT MARKETS

Friday’s Commitments of Traders Report showed managed money traders were net buyers of 10,280 contracts of RBOB for the week ending April 1, increasing their net long to 44,584. For ULSD, managed money traders were net sellers of 120 contracts, increasing their net short to 5,208.

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