Energy Commentary

Friday, April 20, 2018

Today’s Market News

President Trump reacts to OPEC: Recent efforts by OPEC to curb supply and bolster prices including this week’s news that Saudi Arabia was looking for crude to achieve $80-$100 level have been met by criticism from the President on Twitter. He is calling these levels artificially high and crude markets reacted with some weakness.

Russia suggests production cuts could ease: Russian Energy Minister Novak is indicating the OPEC/non-OPEC pact that has been in place since January 2017, and has achieved reduced output of 1.8 million bpd, could be eased prior to the end of 2018. This more bearish tone is in contrast to the news which has been coming from Saudi Arabia recently. The current agreement does run through the end of 2018 but June’s OPEC-led meeting in Vienna will be a great opportunity to discuss adjustments to the current quotas.

Goldman Sachs expecting strong demands: According to Goldman Sachs, global oil demand increases should remain strong for all of the current year. The first quarter will likely show strongest year on year growth since the fourth quarter of 2010. Continued acceleration of emerging markets activity will be key to the expected increases.

Market Opinion: The markets are selling off this morning after President Trump’s comments regarding OPEC’s on-going efforts to further raise prices. Both crude and products are weaker this morning, however, crude is still positive for the week and another test to $70 should be coming soon. In addition, ULSD distillates continue to trend higher and a nearby test of 2018 high ($2.1431) should be anticipated.

© 2018 CHS Inc.