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Outlook: Energy futures have continued to face pressure this morning in front of the Weekly Petroleum Status Update. Front month WTI prices are down over 3% to start the day while products are trading around 2% lower. Concerns regarding Covid-19 in India and other parts of Asia continue to rock the markets as analysts try to gauge slowing fuel demand. India, Taiwan, Vietnam, and Thailand are all experiencing surges in cases, causing new movement restrictions across the continent. Additionally, weakness also stems from speculation surrounding U.S. and Iran talks. The two sides have reportedly made significant progress lately, leading to the expectation that we could see the addition of more Iranian oil supply into the market soon. Inflation concerns also pull prices lower, with equities bearing the brunt of the weakness this morning. Some analysts are speculating that the Fed could increase rates prior to their current timeline due to continued inflation fears. Equities are trading around 1% lower this morning, causing further weakness in the petroleum complex. Traders will now turn their focus to this morning’s weekly EIA report. We can expect products to convey the effects of last week’s pipeline shut down on this morning’s data, while crude stocks will likely show a moderate build.

Crude

• Yesterday afternoon API figures reported a build of 620,000 barrels for U.S. crude stocks. Analysts are expecting the EIA to report a build of 1.6 million barrels.
• Indian Oil Corp lowered its crude processing from 96% of overall capacity to 84% in April due to a loss in demand from recent Covid-19 surges.
• Several Asian energy officials have publicly disputed against the IEA’s report yesterday regarding fossil fuel investments. The officials have stated that no new investments into oil, natural gas, or coal is not the only way to reach net-zero carbon emissions by 2050.
• Russian Deputy Prime Minister Novak stated that they still see an oil deficit for the global oil market despite the recent demand destruction by Covid surges in Asia.
• Four refineries in the U.S. Gulf Coast have slowed production due to ongoing heavy rains and flooding in areas of Eastern Texas and Louisiana.
• The June crude oil contract is trading $2.52 lower at $62.97. The 20-day and 100-day moving averages are $64.30 and $58.77 respectively. The 14-day RSI is 48.63%.
• As of 9:00 am CST: June Brent is down $2.13 at $66.58, the U.S. dollar index is 0.058 higher at 89.868, while the nearby e-mini S&P 500 futures contract is down 49.75 points at 4073.25.

Diesel

• The June ULSD contract is trading $0.0582 lower at $1.9982. The 20-day and 100-day moving averages are $1.9800 and $1.7909, respectively. The 14-day RSI is 56.30%.
• Yesterday the API reported a draw of 2.6 million barrels on its weekly inventory report. Analysts are estimating that this morning’s EIA report will show a draw of 400,000 barrels.

Gasoline

• The June RBOB contract is trading $0.0642 lower at $2.0967. The 20-day and 100-day moving averages are $2.0935 and $1.8773, respectively. The 14-day RSI is 53.73%.
• Yesterday the API reported a draw of 2.8 million barrels on its weekly inventory report. Analysts are estimating that this morning’s EIA report will show a draw of 900,000 barrels.
• Ford unveiled its new electric F-150 Lightning pickup yesterday during a visit from President Biden to its Michigan plant that will be producing the vehicle.  
  

Propane

• The propane market is facing weakness this morning likely due to the sharp losses seen in crude prices.
• At last look, Conway propane was down $0.01250, trading at $0.81000. Mt. Belvieu was down $0.01500, trading at $0.82500.

Natural Gas

• The May Natural Gas contract is trading $0.031 lower at $2.981. The 20-day and 100-day moving averages are $2.998 and $2.853, respectively. The 14-day RSI is 57.88%.
• Reuters analysts forecast that this week’s natural gas storage report will show a build of 57 to 65 bcf.