Weekly U.S. Oil/Refined Products Stock Reports: The EIA report will be released this morning at 9:30 am CST, and according to the latest poll by Reuters, crude is expected to have risen 1.42 million barrels, distillate stocks higher by 264,000 barrels, and a draw on gasoline of 1.51 million barrels. Refinery utilization is estimated to have risen by 0.5% vs last week. U.S. oil refiners anticipate having approximately 1.7 million barrels per day of refining capacity offline this week (planned spring refining maintenance and turnarounds) ending April 11th, which should result in an increase of 59,000 barrels per day in additional refining capacity compared to last week. The weekly offline capacity is expected to decline from 1.7million barrels per day to 1.4 million barrels per day by the end of next week, ending April 18th.
Potential Effects of Falling Oil Prices: Oil prices have fallen by more than 15% since OPEC+ members reported that they plan to increase oil production by substantially more than had been expected, and Trump announced his tariffs. Last week with the drop in prices, these circumstances could very well impact U.S. crude oil production in coming months. In a survey conducted by the U.S. Federal Reserve's Dallas branch, executives with oil and gas production firms said they needed a WTI price of between $61.00 and $65.00 per barrel to profitably drill new wells. Other moderately sized firms said they needed $61.00 per barrel to profitably drill, while smaller firms with production of less than 10,000 barrels per day listed a $66.00 per barrel price. When asked for a price needed to meet operating expenses for existing wells, the average response was $41.00 per barrel, with large firms pointing to a $31.00 per barrel average and small firms putting it at $44.00 per barrel.
Keystone Pipeline: Yesterday morning, a section of the Keystone Pipeline, which transports crude oil from Canada to the United States, experienced a rupture near Fort Ransom in southeastern North Dakota. The $5.2 billion Keystone Pipeline, completed in 2011, transports crude oil from Canada across Saskatchewan and Manitoba, extending through North Dakota, South Dakota, Nebraska, Kansas, and Missouri, ultimately reaching refineries in Illinois and Oklahoma. There hasn’t yet been and update of when the pipeline might start up again, but according to the investigation team, the spill is still under investigation.
Market Overview: WTI crude oil futures are experiencing another significant decline of close to 6%, falling below $56 per barrel, marking their lowest level since February 2021. This drop was driven by concerns over a potential global economic slowdown, which weighed heavily on energy markets. The downturn followed an escalation in the trade conflict between the United States and China, with President Trump implementing stringent new tariffs on numerous countries, including a 104% duty on a wide range of Chinese imports. In retaliation, China announced an increase in its tariffs on U.S. goods to 84%, effective April 10. Increased volatility is expected to persist in the oil markets as the trade war between the United States and China continues to intensify and broader economic uncertainties loom, market analysts anticipate heightened fluctuations in oil prices.
RBOB Chart – Daily
Yesterday, RBOB futures dropped 2.5%, falling to a settle under $2.00, and today, after more tariff announcements, RBOB is down another 4.5%. In recent weeks, U.S. gasoline demand has remained fairly stable, with the EIA forecasting that gasoline consumption would remain unchanged in 2025 averaging at 8.91 million barrels per day, and decline by approximately 1% in 2026. In 2024, U.S. gasoline demand averaged 8.95 million barrels per day. These figures indicate a relatively stable demand for gasoline in the U.S. over the past year, with modest fluctuations anticipated in the coming years. The first level of support has dropped to $1.8700, and the second is the retracement level of $1.8545. First level of resistance comes in at the 23% retracement of $1.9791, with the second level at $2.0466.
Today proved to be a volatile day for oil prices. Initially, oil prices fell into negative territory, with WTI reaching a low of $55.12. However, prices rebounded following an announcement by President Trump, who revealed plans to increase tariffs on China while pausing tariff hikes for most other countries. This caused a dramatic reversal higher in a very short amount of time with prices rebounding back higher by more than 4% to a close of $62.35. As part of his strategy, Trump authorized a 90-day suspension of tariff increases. Additionally, he raised the tariff rate on China to 125%, effective immediately. Oil prices are expected to remain volatile in the short to medium term. Investors and industry participants will need to monitor geopolitical, economic, and supply-demand dynamics closely.
