Energy Stockpiles Fundamental View

April 2, 2024

Conventional energy commodities have mixed data at the inventory level with geopolitical risk pushing them up.

Crude Oil

WTI grew despite a buildup in stocks

  • WTI futures rose +18.2% during Q1 2024, despite a strong buildup in inventory.
  • WTI crude futures settled at $83.2 per barrel on Thursday, advancing for the third consecutive month amid ongoing efforts by the OPEC+ alliance to curb supply, as well as persistent geopolitical risks in Eastern Europe and the Middle East.
  • In early March, OPEC+ agreed to extend voluntary production cuts through the end of Q2 2024 and is expected to maintain current output policies when it meets next week.
  • Oil prices were also boosted recently by Ukrainian drone attacks on Russian refineries which affected more than 10% of the country’s oil processing capacity.
  • On a YTD basis stocks strengthened by 17.1 million barrels, but oil traders remain bullish.



Gasoline prices gradually advance

  • NYMEX gasoline futures soared more than +31% on Q1 2024, as a historically high level of inventory fell abruptly.
  • During the last week of March, gasoline prices remained within $2.74- $2.76 range, amid further evidence of muted demand and eased concerns of low supply.
  • The latest report from the EIA showed that gasoline products supplied, a close proxy for demand in US markets, extended last week’s sharp drop by 94 thousand barrels on the period ending March 22nd.
  • Additionally, gasoline stockpiles in the US jumped by 1.3 million barrels in the week, challenging market expectations of a 1.65-million-barrel draw and halting seven consecutive weeks of declines.


Natural Gas

LNG storage is strong, sending futures lower

  • Natural gas prices plunged -31.3% as Q1 2024 ended.
  • US natural gas prices closed March slightly above $1.76/MMBtu mark due to a larger-than-expected storage draw reported by the EIA and increased demand forecasts for the next two weeks.
  • Utilities withdrew 36 bcf of gas from storage, exceeding the 28 bcf draw expected by the market.
  • Futures prices are expected to remain under pressure due to forecasts of mild weather, ample gas in storage, and reduced gas flow to LNG export plants.
  • These factors may lead to record-high US gas consumption in 2024 and the first production cut since 2020.
  • Energy firms have already reduced output by about 3% in response, delaying well completions and scaling back drilling activities