June WTI expires today.
Outlook: Despite weakness in recent sessions, the fundamental outlook for energy remains supportive with worldwide petroleum drawdowns occurring as economies open. India remains in a tough spot with Covid, but new cases have been on the decline. Outside influences have taken on a bigger role in recent sessions. Despite the fundamental picture erring supportive, I would recommend keeping even on futures due to the recent setback in price and its impact on the charts. On diesel basis, consider coverage now for the balance of summer and fall.
- There appears to be progress in talks regarding Iran’s nuclear program. Iran’s President says a draft outline on an agreement has been completed, but we have not heard confirmation of that from the White House. Another round of meetings is set for next week. Ongoing tension in the region and conflict between Israel and the Palastinian's could inhibit a “deal” happening in the near-term. Yesterday Israel’s Prime Minister Benjamin Netanyaho said they shot an armed Iranian drone down near the border with Jordan.
- In meeting minute notes from their last meeting shown yesterday, the Federal reserve suggested they are thinking about talking about tapering its bond buying program, effectively reducing the amount of stimulus it is putting into the economy. Along with keeping benchmark rates between 0% and 0.25%, the Fed is buying $80 billion of Treasury's and $40 billion of mortgage-backed securities each month.
- The US dollar rose after meeting minutes were released yesterday but is off today. Bitcoin trades at $41,840 after falling to a low of $30,000 yesterday.
- In the aftermath of the Colonial Pipeline hack, US Energy Secretary Jennifer Granholm said mandatory cybersecurity requirements for pipeline operators may be needed.
- Lumber has been falling and yesterday was extremely volatile with a limit down move followed by a limit up move.
- As of 9:33 am CDT: July Brent is down $0.85 at $65.81, the U.S. dollar index is 0.319 lower at 89.872, while the nearby e-mini S&P 500 futures contract is up 28.50 points at 4,140.00.
- Midwest diesel inventories fell 900,000 barrels last week to 26.666 million barrels, which is low for this time of year. This should help keep Group III basis supported.
- In its meeting minutes from yesterday, the Fed noted concern about employment gains due to increase unemployment benefits.
- On the back of updated CDC guidance regarding mask-wearing, businesses could push up return-to-work schedules, which would be supportive to gasoline demand.
- Builds have been slow in recent weeks and propane inventories continue to fade lower against the average, a supportive factor. Midwest propane inventories are at the lowest level in more than 5 years for this time of the year.
- Propane as a percent to crude oil can climb from here looking at the fundamental picture. There is buying interest waiting in the wings if a dip occurs on propane.
NOAA 30-90 day outlook: