Outlook: The energy market softened slightly this morning after initially attempting for a third consecutive day of rallying. Markets are now mostly steady after strong demand prospects moved prices sharply higher to start this week. Recent gains brought WTI up to its highest level since October of 2018. Economic rebalancing remains the main focus of the markets right now. OPEC’s recent production decision provided strength to prices, with Russian Deputy Prime Minister Novak stating that current prices reflect the balance of supply and demand. Additionally, Saudi Arabia's energy minister stated that we will see continued evidence of increasing demand before we see supply increases. Traders will now look towards this morning’s EIA report, as other headlines are scarce. Yesterday afternoon the API reported a draw in crude inventories but showed surprise builds in products. Strong demand in recent weeks had led to the expectation that we would see another week of product draws. If realized this would be the eighth consecutive week of draws for distillate stockpiles.
- Yesterday, the API reported a massive draw for crude stocks of 5.36 million barrels on its weekly inventory report. Analysts are expecting this morning’s EIA report to show a draw of 2.4 million barrels.
- A Bloomberg survey reported that OPEC increased output last month by 320,000 bpd to 25.56 million as the group began to gradually take off supply cuts.
- Saudi Arabia increased its official crude selling price for Asia for July, up by 20 cents from June’s price.
- Research company IIR Energy see’s U.S. oil refiners’ weekly capacity increasing by 337,000 bpd for the week ending June 4. Offline capacity is expected to fall to 260,000 bpd next week.
- The July crude oil contract is trading $0.07 lower at $68.76. The 20-day and 100-day moving averages are $65.64 and $60.48 respectively. The 14-day RSI is 64.96%.
- As of 8:00 am CST: July Brent is up $0.17 at $70.98, the U.S. dollar index is 0.354 higher at 90.263, while the nearby e-mini S&P 500 futures contract is down 26.00 points at 4180.25
- Yesterday, the API reported a build in distillate stocks of 1.56 million barrels on its weekly inventory report. Analysts are expecting this morning’s EIA report to show a draw of 1.5 million barrels.
- The July ULSD contract is trading $0.0021 lower at $2.1050. The 20-day and 100-day moving averages are $2.0363 and $1.8439, respectively. The 14-day RSI is 65.57%.
- Yesterday, the API reported a surprise build in gasoline stocks of 2.5 million barrels on its weekly inventory report. Analysts are expecting this morning’s EIA report to show a draw of 1.5 million barrels.
- The July RBOB contract is trading $0.0059 lower at $2.1882. The 20-day and 100-day moving averages are $2.1317 and $1.9367, respectively. The 14-day RSI is 62.67%.
- Analysts are expecting this morning’s EIA report to show a build of 1.2 MMB, with estimates ranging from 600,000 bbl to 2.5 MMB.
- At last look, Conway propane was up $0.10000, trading at $0.89250. Mt. Belvieu was up $0.05000, trading at $0.91750.
- Power burn in the U.S. continues to aid demand as unseasonably hot temperatures across the country increase cooling needs.
- Analysts expect this week’s Natural Gas Storage Report to show an 87 Bcf injection. If realized, this would be lower than last year’s injection of 103 Bcf and the five-year average of 96 Bcf.
- The July Natural Gas contract is trading $0.026 lower at $3.049. The 20-day and 100-day moving averages are $3.020 and $2.883, respectively. The 14-day RSI is 57.48%.
|As of 8:00 AM CST||WTI July||ULSD July||RBOB July||Nat Gas July|