OPEC+ deals with over production
April 24, 2025
The DOE inventory report had crude oil stocks down 240,000 barrels, gasoline stocks down 4.48 million, and distillates down 2.35 million.
Total crude oil stocks were at 443.104 million and last year they were 453.625. Inventories are sitting right now in the middle of the three range. Total gasoline inventories are 229.543 million barrels and last year there were 226.743 million. Gasoline inventories are above last year and very near the top of the three year range despite stocks falling over the last ten weeks. Distillates stocks are now at 106.878 and last year they were 116.582. Distillates are at the bottom of the three year range and almost the opposite of last year at this time when supplies were near the top of the three year range. If the economy can stay solid and demand is good these low level of supplies could be supportive to distillate prices. But of course, there are a whole host of other reasons that could keep them stuck where we are or lower.
Propane inventories were up 2.263 million barrels, putting total stocks at 46.630 million. Last year at this time supplies were 56.675. Midwest supplies were up 9,000 barrels, putting total stocks at 9.773 million and last year they were 13.384. Gulf Coast stocks were up 2.715 million, putting total stocks at 30.529 and last year they were 35.631 million. Production was up 91,000 barrels, putting the total at 2.835 million bpd. This is near a record and in the top four of total US propane production. Exports were also up 195,000 barrels to a total of 2.161 million barrels, also near record highs. The big number of exports is seen as barrels getting moved before the tariffs took effect.
The energy markets are trading positive but there doesn’t appear to be much conviction or action yet today. There are plenty of mixed signals to keep these markets guessing and it would be nice if prices could settle into a range, but I suspect the volatility will remain driven mostly by headlines.
OPEC+ news is a headwind as Kazakhstan said they have repeatedly produced over their quota and will put its national interest ahead of its OPEC+ commitments. If they are overproducing that likely means others are as well. OPEC+ has said they are bringing more barrel to the market, but they may get more than they want and that is a headwind for prices. The other big item is the China and US trade talks and shockingly the comments from the US and China do not match up. This is a big issue and will not be an easy fix and these mixed comments here to start are a reminder for us that this will be a difficult process and that is also a headwind for prices.