CERA Week: The energy conference in Houston has had top executives and leaders in the industry comment on the state of crude oil and its outlook. According to Torbjorn Tornqvist, CEO of Gunvor, supply growth is outstripping demand and he continues to believe that will be the case. Demand for gasoline and diesel has plateaued in China according to the executive, offset by the massive EV and natural gas investments the Chinese government has made. Additional comments on U.S. production, Torbjorn indicated that he believed if WTI fell another $5-$6 (U.S.) per bbl, shale producers would be unlikely to grow further American output.
Tariff Impacts: The state of Wisconsin exports approximately $7.9 billion (U.S.) to Canada according to Reuters, and is expected to be one of the states most impacted by the trade policy shift with Canada in particular. In an interview with Ariens COO Nicholas Ariens, the company that manufactures orange snowblowers among other equipment, have been preparing for tariffs since the election in November as the COO referenced the fulfilment of campaign promises. Like many U.S. companies, the recent spat of trade policies have sent businesses in both the U.S. and other countries running to understand the exposure they face to these policies.
Ukraine/Russia War: In another attack conducted by Ukraine, the largest drone attack on Moscow to date in the war has taken place overnight. 337 drones were used in the attack with almost a third of those directly impacting Moscow. Targets in the attack appear to be strategic in the logistics chain of the Russian army. 2 people were killed with another 18 people injured.
Market Overview: Petroleum contracts are starting the session higher as the greenback hits a four-month low. Concerns remain strong that the U.S. economy is heading the wrong direction as now more data suggests a slowing of the U.S. economy in Q1 2025 with Goldman now revising GDP forecasts lower by half a percentage point. Much of the headlines have remained the same in the last two weeks regarding the economy and global conflicts.
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Crude oil has returned to levels not seen since September 2024 as the market digests some of the topics covered above - economy, supply and demand, and conflicts impacting product flows. That said, it appears that the market has found some resistance around the $65 level that has kept the contract from breaking lower. However, with an April deadline on OPEC production increases, discussions about removing sanctions on Russian oil, the possible redirection of Canadian crude from America, and the campaign promise of the Trump administration to increase domestic crude production, there could still be some downside on the product should one or a combination of any of those items become reality.
Crude and refined futures moved higher in the session today from a weakening greenback, the dollar having hit a 4-year low during the session. Recession and tariff fears continue to weigh on markets keeping a tight lid on upward momentum. On the financial side, which often follow crude, indexes were on track for correction levels after the S&P 500 index ended with the largest one-day drop since December 18th. The NASDAQ composite also slid with its largest percentage drop since September 2022 as investors expect economic decline. Gains on petroleum futures earlier in the session were limited after President Trump announced an increase on steel and aluminum tariffs for material coming from Canada. The U.S. administration is planning an increase from 25% tariffs ,that were implemented last week, to 50%. The administration cited the tariffs as reciprocal due to the implementation of a 25% fee on electricity from the province of Ontario sent into Minnesota, Michigan, and New York. Due out this afternoon and tomorrow are the API and DOE inventory data, respectively. Expectations from a Reuters poll suggest a build on crude inventories while gasoline and distillate inventories expect a draw.
