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Outlook: Energy futures have managed to push higher overnight but are still set to see a weekly loss due to the last few consecutive days of sharp losses. Iranian nuclear talks have been the main catalyst for price action this week and continue to be so as experts expect a deal will be reached soon. Negotiations between the two countries are set to continue next week in Vienna. Analysts are forecasting that we will see a 1 million bpd increase in Iranian supplies during the second half of this year. Equity futures have also managed to find some strength this morning as tech stocks experience a bit of a bounce back after recent Bitcoin losses. Macro sentiment had experienced a slight setback this week due to expectations that the U.S. Federal Reserve would switch to a more hawkish stance. Additionally, news regarding the Israel Palestine conflict has buoyed markets as Israel and Hamas have agreed to a ceasefire. Overall markets will likely continue choppy trade in the near term, but optimism for the second half of the year remains.

Crude

• India’s state refiner HPCL stated today that it expects global oil prices to remain below $70 if Iran sanctions are lifted. Indian refiners are supposedly planning to replace some of their spot purchases in the second half of this year with Iranian oil.
• British bank Barclays stated that it sees a decrease in demand for Emerging Markets Asia, excluding China, due to the recent surge in Covid-19. The group however stated that the effects would likely be more short-term due to a strong global vaccination program.
• Indian refiners were seen increasing their crude oil processing in April by about 35%, year over year. Natural gas output rose by 22.7% while crude production fell by 2.1%.
• The June crude oil contract is trading $1.46 higher at $63.40. The 20-day and 100-day moving averages are $64.35 and $59.05 respectively. The 14-day RSI is 45.59%.
• As of 8:15 am CST: June Brent is up $1.14 at $66.25, the U.S. dollar index is 0.068 higher at 89.876, while the nearby e-mini S&P 500 futures contract is up 15.50 points at 4169.75.

Diesel

• U.S. lawmakers are expected to have revealed a bill yesterday that would incentivize the use of a lower-carbon sustainable aviation fuel. The tax incentive would be up to $2.00 for every gallon of sustainable fuel produced.
• The June ULSD contract is trading $0.0283 higher at $1.9927. The 20-day and 100-day moving averages are $1.9893 and $1.8004, respectively. The 14-day RSI is 50.50%.

Gasoline

• Gross margins for U.S. gasoline producers have surged to over $24 a barrel recently, up from $10 at the beginning of this year and the highest level seen since 2015. Refiners will likely maximize their gasoline production even as demand continues to be lackluster.
• The June RBOB contract is trading $0.0250 higher at $2.0722. The 20-day and 100-day moving averages are $2.0994 and $1.8883, respectively. The 14-day RSI is 47.46%.

Propane

• The propane market is facing weakness this morning likely due to the recent sharp losses seen in crude prices.
• At last look, Conway propane was down $0.0300, trading at $0.79250. Mt. Belvieu was down $0.00750, trading at $0.82500.

Natural Gas

• The May Natural Gas contract is trading $0.010 lower at $2.915. The 20-day and 100-day moving averages are $3.009 and $2.861, respectively. The 14-day RSI is 54.97%.
• Natural gas prices were seen recovering some of their losses overnight before slipping lower this morning due to pressure from yesterday’s bearish EIA data.

Analysts are viewing this week's price action in commodities as a pause in the recent boom across energy, agriculture and metals. The energy sector has seen the biggest gains so far in 2021 as shown in the graphic below.