Outlook: The energy market fell lower to start the day as prices experienced profit taking after yesterday’s jump higher. Crude and products have since recovered slightly and now sit in the green. Colonial Pipeline has announced that their U.S. pipeline system should resume operations by this weekend. Effects of the shutdown seem to be less than first expected with the front month RBOB futures falling back to levels seen last week. This morning’s initial selloff was further caused by weakness in equities. Stock indexes are seen falling lower due to sharp losses in tech shares. Nasdaq futures have lost about 2% due to weakness in Apple, Facebook, Amazon, and Tesla shares. Recent headlines regarding inflation fears and a labor shortage have fueled todays selloff in the technology sector. Support in energy however stems from a weakening U.S. dollar and an optimistic demand outlook. OPEC released its 2021 demand prediction today, increasing its forecast by 200,000 bpd due to continued economic recovery in the U.S. and China. The group did cut its Q2 forecast due to the recent Covid spikes seen in India but was seen offsetting these losses with an increase in Q3 and Q4 forecasts. The lower direction seen in the market this morning was likely just temporary, with the long term trend still looking friendly for energy prices.
- OPEC left its forecast for demand recovery in 2021 unchanged, estimating a 6.6% increase in demand. OPEC also reported that its oil output in April rose by 30,000 bpd to 25.08 million bpd due to increases in Iranian supply.
- Several sources have stated that Saudi Arabia will supply full requested volumes to at least six refiners in June. In May the country was seen easing its supply cuts for buyers after OPEC+ agreed to lift production restrictions from May to July.
- India’s top oil refiners are seen cutting their operating rates and crude imports due to the current lockdowns across India that is causing disruptions in demand recovery.
- The June crude oil contract is trading $0.25 higher at $65.17. The 20-day and 100-day moving averages are $63.65 and $58.02 respectively. The 14-day RSI is 56.41%.
- As of 9:15 am CST: June Brent is up $0.10 at $68.42, the U.S. dollar index is 0.139 lower at 90.073, while the nearby e-mini S&P 500 futures contract is down 46.0 points at 4,137.5.
- The June ULSD contract is trading $0.0121 higher at $2.0287. The 20-day and 100-day moving averages are $1.9330 and $1.7566, respectively. The 14-day RSI is 67.88%.
- American Airlines has added stops to two different long-haul flights that leave from Charlotte, NC, due to the fuel shortages caused by the pipeline shut down.
- Gasoline supplies tightened further today in parts of the U.S. as effects from the pipeline shutdown continue. AAA reported that prices at the pump are at their highest level since 2014 and warned against hoarding as it would worsen the situation.
- Shipping data today showed that refiners had booked at least five tankers to store excess gasoline that is stuck in the U.S. Gulf. Gulf Coast refineries have also slowed production due to lack of storage space.
- The June RBOB contract is trading $0.0034 higher at $2.1368. The 20-day and 100-day moving averages are $2.0676 and $1.8530, respectively. The 14-day RSI is 61.00%.
- Propane prices are trading quieter today, down just slightly this morning. At last look, Conway propane was down $0.0150, trading at $0.77500. Mt. Belvieu was down $0.0050, trading at $0.80000.
- Prices continue to slip for the natural gas market as the weather story remains bearish for the market. The 6-10 day and 8-14 day NOAA outlooks both are forecasting above average temperatures for a majority of the U.S.
- The May Natural Gas contract is trading $0.024 lower at $2.908. The 20-day and 100-day moving averages are $2.871 and $2.776, respectively. The 14-day RSI is 55.96%.
|As of 9:15 AM CST||WTI June||ULSD June||RBOB June||Nat Gas June|