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Outlook: The energy complex started the week trading slightly lower before pulling higher this morning. Losses overnight were limited by optimism regarding economic recovery which also aided in pushing prices higher this morning. Several countries including Britain, France, and Spain have now eased their Covid-19 restrictions as vaccination rates accelerate in the EU. Energy prices are finding strength from economic reopening as we now head into the summer travel season. Additionally, the U.S. continues to move towards some sense of normalcy with several larger companies including Costco and Target revising their own mask requirements. Gains the morning however are limited by remaining issues in India and other parts of Asia. Singapore and Japan have both recently taken new measures in response to higher case counts. Health officials are concerned that the highly transmissible Covid variant in India could start spreading to surrounding countries. Several Indian states reported on Sunday that they would extend their current lockdowns as case surges continue. Overall, continued economic recovery across the globe should lend strong support to energy markets, especially as we can expect higher travel demand this summer. Traders will remain watchful of developments in India and Asia, but prices should continue an upwards trend.  

Crude

• The National Bureau of Statistics reported that China’s factories slowed their output in April as growth was seen at just 9.8% compared to 14.1% in March.
• China’s April crude throughput was seen rising by 7.5% in April, year over year. The country processed about 14.09 million bpd in April, above 13.1 million bpd last year but still below the record high of 14.20 million bpd seen in November.
• On Friday, Baker Hughes reported that U.S. oil and gas producers added rigs for the third consecutive week as prices continue to strengthen. The total rig count increased five to 453 for the week ending May 14.
• The June crude oil contract is trading $0.43 higher at $65.80. The 20-day and 100-day moving averages are $64.06 and $58.69 respectively. The 14-day RSI is 57.65%.
• As of 9:00 am CST: June Brent is up $0.38 at $69.09, the U.S. dollar index is 0.044 lower at 90.277, while the nearby e-mini S&P 500 futures contract is up 15.50 points at 4158.35.

Diesel

• Trucking activity in India has been hit the worst by recent pandemic restrictions. Analysts estimate that activity is almost half of what is seen during more normal times, greatly affecting diesel demand. Additionally, jet fuel demand is seen down by about 38% from last month.
• United Airlines reported that its summer travel bookings are up by over 200% from values seen a year ago. The company plans to add over 400 more flights to its July schedule.
• The June ULSD contract is trading $0.0095 higher at $2.0457. The 20-day and 100-day moving averages are $1.9625 and $1.7786, respectively. The 14-day RSI is 63.85%.

Gasoline

• Domestic sales for gasoline and diesel in India were seen falling by about 20% in the first half of May due to the recent lockdowns.
• Reuter’s reported that about 1000 gasoline stations on the East Coast received supplies on Sunday, easing the shortages that affected the region last week. According to GasBuddy, about 70% of stations in D.C. were still empty.
• GasBuddy reported that U.S. demand for gasoline dropped by 15% this past Saturday compared to a week earlier as people eased panic buying.
• The June RBOB contract is trading $0.0134 higher at $2.1386. The 20-day and 100-day moving averages are $2.0793 and $1.8644, respectively. The 14-day RSI is 60.06%.

Propane

• Propane markets will likely keep a more bullish sentiment unless we begin to see larger builds in order to aid low inventories.
• At last look, Conway propane was up $0.0075, trading at $0.80250. Mt. Belvieu was up $0.0050, trading at $0.82000

Natural Gas

• The May Natural Gas contract is trading $0.168 higher at $3.129. The 20-day and 100-day moving averages are $2.979 and $2.847, respectively. The 14-day RSI is 74.19%.

Saudi Arabia’s March crude exports were seen falling to a 9-month low of 5.427 million bpd compared to 5.625 million in February.