Outlook: The energy market continues its rally higher this morning with crude and products all trading just under 1% higher on the day. Support continues to stem from OPEC+ decisions and expectations of strong demand recovery. OPEC+ agreed yesterday in its meeting to keep the current plan to increase supply gradually to the market, the meeting was the shortest in history and only took 20 minutes. The markets are taking this as a strong sign of the group’s confidence in demand recovery. Additionally, the group’s forecast for the remainder of the year was revised to show a larger deficit of supply as the oil market rebalances. Currently it seems that the market is confident that returning demand will balance out any increases in OPEC supply and also possible increases in Iranian supply. Talks regarding Iran have slowed recently, and analysts are expecting that any return of barrels could now occur later in the year, when the economy is more stable.
- Kazakhstan’s oil output in May was seen at 6.24 million tonnes, down about 1% from April but still above the OPEC+ quota. The figure converts to about 1.469 million bpd, slightly above the 1.463 million bpd quota.
- Russian total oil and gas condensate production in May rose to 44.21 million tonnes, up from 42.81 million in April, which was a day shorter. Additionally, oil exports for the first five months of the year beyond countries that were formerly in the Soviet Union fell by 16% compared to the same period last year.
- The EIA will release its Weekly Petroleum Status Report tomorrow, Thursday June 3, due to this week’s holiday.
- The July crude oil contract is trading $0.49 higher at $68.21. The 20-day and 100-day moving averages are $65.45 and $60.30 respectively. The 14-day RSI is 63.44%.
- As of 8:20 am CST: July Brent is up $0.73 at $70.98, the U.S. dollar index is 0.236 higher at 90.067, while the nearby e-mini S&P 500 futures contract is up 6.25 points at 4204.75.
- Diesel prices in the UK have reached their highest level since January of 2020 as average sales for stations have risen from 2,500 liters in January, to almost 6,500 liters.
- The July ULSD contract is trading $0.0170 higher at $2.0885. The 20-day and 100-day moving averages are $2.0303 and $1.8385, respectively. The 14-day RSI is 64.02%.
- UK’s demand for road fuel, petrol and diesel, has increased by 2.5 times since the beginning of 2021 as the country sees the fastest vaccination rate in Europe. Prices of unleaded gasoline in the UK have reached their highest level since August 2019.
- The July RBOB contract is trading $0.0147 higher at $2.1851. The 20-day and 100-day moving averages are $2.1290 and $1.9311, respectively. The 14-day RSI is 62.67%.
- Propane values continue to find bullish direction from both crude oil strength and unseasonably low inventory numbers.
- At last look, Conway propane was up $0.02500, trading at $0.88250. Mt. Belvieu was up $0.02500, trading at $0.91250.
- Fundamentals for this market seem to be strengthening as we head into hot summer weather slightly early this year. Increased forecasts for severe storms such as hurricanes this season could also add some risk premium into the markets.
- The July Natural Gas contract is trading $0.004 higher at $3.108. The 20-day and 100-day moving averages are $3.017 and $2.881, respectively. The 14-day RSI is 60.59%.
|As of 8:20 AM CST||WTI July||ULSD July||RBOB July||Nat Gas July|