AMERICAS OIL: WTI Crude markets have weakened amid oversupply concerns

March 5 - Americas End-of-Day Oil Summary: WTI Crude markets have weakened amid oversupply concerns after OPEC’s decision to move ahead with its April output hike, a larger than expected rise in EIA crude inventories, and expectations for weaker global demand along with increased trade protectionism.

• US crude inventories rose by 3.6mbbl driven by a decline in refinery runs and despite a small drop in imports while exports held above 4mb/d. Refineries cut utilization to 85.9% to partially reverse the increase seen the previous week but remains above last year levels.
• US President Trump warned Americans on Tuesday there could be more discomfort ahead as he pushes wide reaching sanctions he said will raise “trillions and trillions” in revenue and rebalance trading relationships he called unfair.
• A 10% tax was imposed yesterday on energy imports from Canada. In retaliation Ontario has introduced a 25% export tax on electricity going to Michigan, Minnesota and New York.
• OPEC+ oil output rose in February as Iranian exports held strong, despite renewed US attempts to curb flows, while Nigeria boosted output above its target, according to a Reuters survey.
• Enbridge plans to add 300k b/d of new capacity to its Mainline crude oil system to meet growing demand from Western Canada to the US Midwest and the USGC, Platts reported.
• US tariffs on Canada and Mexico are bullish for gasoline and diesel, but bearish for HSFO and heavy crude, Platts said.
• Mexican President Sheinbaum said about the tariffs, “there is no reason, justification or excuse that supports this decision that will affect our people and nations.”
• Phillips 66’ 258,500 b/d Bayway refinery in Linden, New Jersey, is undergoing a major turnaround, research company IIR energy said on Wednesday. Maintenance began in mid-February and is expected to last 50 days.
• Canadian light crude strengthened with Bloomberg reporting Edmonton Mixed Sweet crude’s discount to WTI in Alberta narrowed to $5.50/bbl from $6.40 at the end of day Tuesday.
• US President Trump and Canadian Prime Minister Trudeau held a call that did not yield a result though discussions were continuing and Commerce Secretary Lutnick said Trump was leaning towards exclusion of USMCA goods. The White House announced a one-month exemption would be granted to any autos coming through USMCA.
• The NOAA 6–14-day outlook is net bearish through Mar 18 for heating demand with below-normal conditions forecast in the Southwest and northern Maine, but milder conditions expected from the Great Plains to the Midwest shifting east later in the forecast. The West Coast cools late in the forecast period. Elevated heating demand is likely in PADDs 4 and 5, with below normal demand in most of PADDs 1-3.
• Cracks fell despite larger-than-expected stock draws but amid demand concerns related to the impact of tariffs and slowing economic growth.
  • WTI Apr futures were down 3.0% at $66.24
  • WTI May futures were down 2.7% at $65.84
  • RBOB Apr futures were down 2.8% at $2.13
  • ULSD Apr futures were down 2.1% at $2.24
  • US gasoline crack down 0.8$/bbl at 23.37$/bbl
  • US ULSD crack down 0.2$/bbl at 27.83$/bbl