Outlook: Energy futures have started the week higher with crude prices up by over $1 this morning. Support stems from potential setbacks in Iranian talks as the U.S. and Iran are scheduled to resume discussions this week. Weakness last week, due to the ongoing talks, had caused oil prices to see a weekly loss of around 3%. Now headlines regarding the ending of nuclear sites images have pushed prices higher as it has caused uncertainty in regard to current talks. Iran stated that access to nuclear site images for the U.N. nuclear watchdog had expired after the failure to agree on an extension. While these headlines have added some caution to the market, it still seems inevitable that a deal will be struck, and Iranian crude will eventually re-enter into the market. While excess supply from Iran may cause some lower price action initially, demand outlooks for the next few months should help support prices. Vaccine efforts continue across the globe with road traffic and air travel all showing signs of increasing demand. Airfares and hotel rates have risen in the last month with Domestic U.S. fares up by 9% since April 1, and international fares up by 17%. Continuing strong signs of travel demand as we head into the summer months should help prop up prices in the second half of the year and limit most near-term weakness.
- Goldman Sachs has stated that it still expects oil prices to rise to $80 per barrel in the fourth quarter despite the probable return of Iranian supply. The bank stated that a vaccine-driven increase in demand will support prices in the next few months.
- The ship owner of the Ever Given has stated that canal authority is responsible for the grounding of the vessel in the Suez Canal. Lawyers state that the ship should have been accompanied by at least two tugboats but was not.
- A U.S. federal court judge ordered on Friday that the Dakota Access oil pipeline could remain open for now. The 570,000 bpd pipeline will remain open until the new federal environmental review is completed next year.
- Last Friday’s Commitment of Traders report showed crude specs to have sold 20,800 contracts, leaving their new net long at 520,792 contracts.
- The June crude oil contract is trading $1.52 higher at $65.10. The 20-day and 100-day moving averages are $64.56 and $59.23 respectively. The 14-day RSI is 54.40%.
- As of 9:15 am CST: June Brent is up $1.42 at $67.86, the U.S. dollar index is 0.226 lower at 89.791, while the nearby e-mini S&P 500 futures contract is up 38.50 points at 4190.25
- Last Friday’s Commitment of Traders report showed heating oil specs to have bought a total of 15,954 contracts, leaving the new net long at 21,874 contracts.
- The June ULSD contract is trading $0.0363 higher at $2.0245. The 20-day and 100-day moving averages are $1.9973 and $1.8059, respectively. The 14-day RSI is 57.38%.
- According to the Federal Highway Administration, road traffic in March was down by less than 4% compared to the same month in 2019. This is a strong sign that U.S. traffic volumes are nearing pre-pandemic levels.
- Last Friday’s Commitment of Traders report showed RBOB specs to have bought a total of 1,009 contracts, leaving the new net long at 57,818 contracts.
- The June RBOB contract is trading $0.0286 higher at $2.0971. The 20-day and 100-day moving averages are $2.1060 and $1.8944, respectively. The 14-day RSI is 53.99%.
- At last look, Conway propane was up $0.00250, trading at $0.81250. Mt. Belvieu was up $0.00750, trading at $0.83750.
- EIA data showed that natural gas generation in 2021 saw its first year over year decline in three years. Data for the first four months of the year showed a near 7% decrease compared to the same period last year. The graphic below depicts decreases in natural gas generation from January to April.
- The May Natural Gas contract is trading $0.027 lower at $2.879. The 20-day and 100-day moving averages are $3.007 and $2.864, respectively. The 14-day RSI is 47.58%.
|As of 9:15 AM CST||WTI June||ULSD June||RBOB June||Nat Gas June|