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First Look - Oil dips as crude stockpiles surge

WTI crude dropped to $72.50 after the API reported a 9 MMBbl rise in nationwide US inventories last week, if true, this would be the biggest increase in a year
- Prices remain steady despite the dollar surging due to US consumer price data coming in hotter than expected
EIA forecasts oil production to grow in 2025 (S&P Global)
- Despite flat rig counts, lower 48 crude output is projected to rise from 11.15 MMBbl/d in Q1 to 11.5 MMBbl/d in Q4 2025, led by the Permian Basin
- Production in the Permian is expected to increase 6% to 6.78 MMBbl/d over the same period
  - This is a much more moderate pace than the 18% from 2023, due to companies focused on cutting capital spending
China’s crude oil imports decline from record 2023 record high (World Pipelines)
- In 2024, China’s crude imports averaged 11.1 MMBbl/d, a 2% decline from the record 11.3 MMBbl/d in 2023
- While gasoline and jet fuel consumption increased, a significant drop in diesel demand led to reduced refinery activity and lower crude imports
  - In 2024, refiners likely tapped into existing reserves, reducing the need for imports

Natural gas is mostly unchanged from yesterday, with prices near $3.50.MMbtu
- Weather forecasts warmed slightly, although temperatures are still expected to be below the ten-year average for the next two weeks
PJM to fast-track approval of new power plants (BBG)
- PJM, the largest US electrical grid, has gained federal approval to begin fast-tracking dozens of planned power plant projects in a push to increase power supply for data centers
- The new power plants, which likely include several large gas generators, would have been stuck in the interconnection queue but instead will be part of a batch review of 55 generator projects this spring
- Last year, PJM raised concerns about resource adequacy from significant demand growth driven by data centers
Trident pipeline gains interest (BBG)
- Entergy and Kinder Morgan have reached a transportation agreement for natural gas to be delivered to end users in southeast Texas, supporting the development of a planned intrastate pipeline
- The arrangement was developed in collaboration with Golden Pass LNG as part of Kinder Morgan’s Trident pipeline project, which will ship gas from the Katy Hub around Houston to the border of Louisiana
- The pipeline is expected to enter service in early 2027