Outlook: Oil and petroleum product markets are all seeing sharp losses this morning, down by over 2% across the board. Weakness stems from inflation concerns, continuing issues in India, and the restarting Colonial Pipeline. The producer price index, a gauge for inflation, was seen spiking by 6.2% in April, YoY, the largest increase since 2010. Yesterday we also saw a spike in the consumer price index, signaling the fasted increase in inflation since 2008. Equity markets started the day lower but have since recovered and sit in the green now, recovering a portion of their recent sharp losses. Colonial Pipeline announced yesterday evening that they would be restarting the pipeline. It is still expected that a full recovery to the supply chain will take several days after the disruption. Recently gas shortages in the eastern states have cause prices to shoot up to their highest levels since 2014. Fuel stocks within the U.S. Northeast are expected to hit 5-year lows this week and a full recovery in this market could take a couple weeks. India issues also persist with health officials highly concerned of the new variant and its high transmissibility. Traders are cautious of the increasing effects on demand from these case spikes, but effects are still expected to be brief with demand increasing again in the second half of the year. Additionally, the U.S. dollar was seen strengthening in comparison to a basket of other currencies this morning, causing further pressure as this increases the cost of U.S. oil exports for other currencies. Overall, we still saw supportive long term demand forecasts this week from the IEA and OPEC which should help support markets. Current losses seem to be limited to a more near term timeline.
- Coronavirus cases were seen topping 23 million in India over the last 24 hours. The death toll has also now crossed 250,000, leaving experts concerned for when the case counts will peak and start to improve.
- Colonial Pipeline is said to have paid hackers, Darkside, almost $5 million in ransom according to a Bloomberg Reporter’s tweet.
- The core Producer Price Index, or PPI, which includes items such as food and energy was seen rising by 0.7% in April and 4.6% year over year. This was seen as the largest jump since 2014 when the data first started being calculated.
- The June crude oil contract is trading $1.79 lower at $64.29. The 20-day and 100-day moving averages are $63.89 and $58.37 respectively. The 14-day RSI is 55.14%.
- As of 9:30 am CST: June Brent is down $1.71 at $67.61, the U.S. dollar index is 0.003 higher at 90.716, while the nearby e-mini S&P 500 futures contract is up 58.25 points at 4117.
- Group 3 basis levels continued their fall lower yesterday as planting demand eases and imports into the Midwest were seen rising.
- The June ULSD contract is trading $0.0551 lower at $2.0144. The 20-day and 100-day moving averages are $1.9491 and $1.7679, respectively. The 14-day RSI is 75.26%.
- The national average for gasoline prices according to AAA now sits around $3.028 a gallon. This is the first time average retail gas prices have risen above $3 since 2014.
- GasBuddy reported that almost 60% of gas stations in metro Atlanta had run out of gasoline, 65% of stations in North Carolina were seen without fuel, and 43% in South Carolina.
- The June RBOB contract is trading $0.0459 lower at $2.1151. The 20-day and 100-day moving averages are $2.0777 and $1.8658, respectively. The 14-day RSI is 57.65%.
- The market is trading lower this morning due to spillover weakness from the crude market along with weakness due to yesterday’s reported build. The larger than expected build however still places inventories about 17.6 mmb below last year’s values.
- At last look, Conway propane was down $0.0175, trading at $0.7825. Mt. Belvieu was down $0.0075, trading at $0.79750.
- The EIA reported a 71 Bcf build on its weekly natural gas storage report, Reuters analysts were forecasting a 68 to 82 BCF build.
- As residential and commercial heating demand continues to drop, Bentek has reported that it sees U.S. demand levels yesterday down by 1.6 Bcf/d lower. Exports to Mexico however climbed to a near new record high of 6.9 Bcf/d.
- The May Natural Gas contract is trading $0.018 higher at $2.987. The 20-day and 100-day moving averages are $2.954 and $2.841, respectively. The 14-day RSI is 60.27%.
|As of 9:30 AM CST||WTI June||ULSD June||RBOB June||Nat Gas June|