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Outlook: The petroleum complex traded in the green overnight, managing to capture some new two month highs before falling lower this morning. The benchmark Brent contract was seen breaking over $70 overnight prior to moving into the red this morning. Products managed to hold onto gains for a bit longer but eventually succumbed and fell into negative territory. Support for these markets stemmed from economic reopening across the globe. Yesterday Britain further eased its restrictions and several countries in the EU began reopening cities and beaches. As we head into the summer travel season, we can expect all of the pent up travel demand to surface and continue supporting energy prices. Weakness on the other hand that limits gains in products and pressures crude markets stems from worsening covid headlines in Asia. Singapore and Taiwan have both reinstated some lockdown measures due to concerns of the spreading variant in India. Yesterday we saw data exemplifying the effects so far on fuel demand in India, we can expect this trend to continue as the new lockdown measures will further hurt demand recovery. Additionally, talks between Iran and the U.S. in regard to the 2015 nuclear deal also places pressure on prices. Traders are currently speculating if the talks will lead to the removal of sanctions and in turn increased Iranian production.

Crude

• U.S. April Housing Starts reportedly fell by 9.5% in April compared to a 19.8% increase in March.
• The EIA reported in its monthly forecast yesterday that U.S. Shale production increased by 26,000 bpd to 7.73 million bpd, the first increase in three months.
• The IEA reported that investors should avoid funding any new oil, gas, or coal projects if the world wants to reach zero net emissions by 2050. Recently, Shell shareholders have also pushed for additional climate action from Shell as the company sets its sights on the 2050 timeline.
• Several retailers including Walmart, Home Depot, and Macy’s saw robust growth in their recent earnings and revenue reports, a strong sign of continued economic recovery.
• The June crude oil contract is trading $0.47 lower at $65.80. The 20-day and 100-day moving averages are $64.22 and $58.62 respectively. The 14-day RSI is 59.38%.
• As of 9:15 am CST: June Brent is down $0.48 at $68.98, the U.S. dollar index is 0.296 lower at 89.868, while the nearby e-mini S&P 500 futures contract is down 4.75 points at 4153.

Diesel

• China’s diesel output in April was reported down by 6.5%, year over year, at 12.52 million tonnes. Diesel exports were seen up by 5.7% due to a recovery in overseas demand.
• The June ULSD contract is trading $0.0019 lower at $2.0585. The 20-day and 100-day moving averages are $1.9730 and $1.7859, respectively. The 14-day RSI is 65.95%.

Gasoline

• China’s gasoline output in April was reported up by 17.4%, year over year, at 11.8 million tonnes. Gasoline exports however were seen dropping by 22.8%, year over year, but this is expected due to tighter domestic supplies and refinery maintenance.
• As of yesterday, GasBuddy reported that 11,667 gas stations in the U.S. were still without fuel. During the week of the pipeline shutdown that number was seen peaking at 15,000.
• The June RBOB contract is trading $0.0026 lower at $2.1555. The 20-day and 100-day moving averages are $2.0876 and $1.8714, respectively. The 14-day RSI is 62.89%.

Propane

• U.S. corn planting progress was reported at 80% complete as of May 16. The planting pace is seen ahead of last years pace by about 2% and ahead of a the 5-year average by 12%.
• At last look, Conway propane was up $0.0125, trading at $0.82000. Mt. Belvieu was up $0.01025, trading at $0.83750.

Natural Gas

• The May Natural Gas contract is trading $0.066 lower at $3.043. The 20-day and 100-day moving averages are $2.990 and $2.850, respectively. The 14-day RSI is 66.29%.
• Natural gas production from major shale basins is forecast to decrease in June for the third consecutive month according to the EIA. This would mark the first time on record that production decreased in June, since the EIA first starting reporting drilling productivity in 2007.