Market Pulse
U.S. energy inventories declined sharply, driven by strong demand and record export activity. Total crude stocks fell by 13.4 million barrels, including a 6.2 million barrel draw in commercial inventories and a 7.1 million barrel reduction from the Strategic Petroleum Reserve. Exports surged to a record 6.4 million barrels per day, contributing to significant product draws across the board: diesel inventories declined by 4.5 million barrels, gasoline by 6.1 million barrels, and propane by 1.1 million barrels. Notably, gasoline imports are running at roughly half of last year’s levels, raising concerns about supply adequacy ahead of peak driving season. Refinery output has softened, while total product demand has risen to an average of 20.6 million barrels per day over the past four weeks, up 4.6% year over year.
Despite these declines, commercial crude inventories remain slightly above the five-year average at 459.5 million barrels. Market prices have responded to tightening fundamentals, with Brent crude trading near $116.70 per barrel and WTI around $104.60, both posting strong weekly gains. Given ongoing supply constraints and elevated export demand, further upward pressure on refined products, particularly propane, is likely. While opportunistic purchasing on market pullbacks remains advisable, waiting for a significant sell-off may present risk, as pricing could remain elevated, with propane potentially exceeding $1 per gallon in the near term depending on export capacity expansion and market conditions.
Fundamentals
EIA’s Weekly Petroleum Inventory in MM’s BBLS
| Commodity | US Inventory | Change | 5 Yr Ave | CURRENT MARKETS |
|---|---|---|---|---|
| Crude Oil | 459.5 | -6.2 | 454 | WTI Crude: 5.24 |
| Gasoline | 222.3 | -6.1 | 228 | Heating Oil: 0.2124 |
| Distallates | 103.6 | -4.5 | 116 | RBOB: 0.1596 |
| Commodity | US Inventory | Change | Midwest Invent | Change |
|---|---|---|---|---|
| Propane | 78.8 | -1.1 | 15.6 | 0.6 |
Propane
Propane hub prices were mixed on Tuesday, as trading hubs showed limited willingness to follow crude oil’s strength for a second consecutive session. U.S. LPG exports are projected to approach maximum capacity in May, with propane and butane competing for available dock space.
Butane exports have risen in April, averaging approximately 625,000 barrels per day, compared with 565,000 barrels per day in March. The Energy Information Administration is expected to report an increase of 1.31 million barrels in U.S. propane/propylene inventories on Wednesday, based on the average estimate from an OPIS survey of market participants.
OPEC+ Instability
Oil and refined product prices have risen amid heightened instability in the petroleum market, driven by disruptions in the Strait of Hormuz and the United Arab Emirates decision to exit OPEC, effective May 1. This signals a broader shift in global energy dynamics tied to the conflict involving Iran.
Concerns are growing that other producers, such as Venezuela and Kazakhstan, could also leave the OPEC/OPEC+ framework, weakening coordinated supply controls and increasing the risk of price volatility.
The UAE’s exit reflects both geopolitical tensions and its ambition to expand production capacity. With the ability to raise output beyond prior quota levels, production could increase significantly over the coming years, particularly without OPEC-imposed limits. However, near-term supply growth remains constrained by ongoing restrictions in the Strait of Hormuz.
Funny
Disclaimer: The data, information and related graphics (collectively, “Information”) is for general information use only and is compiled from sources believed to be reliable. Dale Petroleum Company does not guarantee its accuracy or completeness, nor does DPC assume any liability for any inaccurate or incomplete information. The Information is not intended to be a research report nor an analysis of a company and it should not be relied upon for making investment decisions. The information is subject to change without notice, is for general information only and is not intended as any offer or solicitation with respect to the purchase or sale of any financial instrument or as personal investment advice.