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Outlook: The energy complex continues to see higher trade this morning in front of the Weekly Petroleum Status Report. Yesterday, WTI crude managed to settle above $70 for the first time since October of 2018. Strong support later in yesterday’s session stemmed from signs that Iranian oil would not be reentering the market anytime soon. U.S. Secretary of State, Antony Blinken, stated that he anticipates hundreds of sanctions will remain in place even if a deal is reached. Strong demand recovery in both the U.S. and EU also aids in upwards price movement. Yesterday afternoon we also saw industry stockpile data that showed a draw in crude inventories and builds in products. The EIA is expected to confirm a draw for crude stocks this morning, which will mark the third consecutive week of draws. Overall, fundamentals remain strong for the energy markets and should keep prices supported as we continue to see additional demand recovery across the globe.

Crude

• Yesterday the API reported that crude stocks saw a draw of 2.1 million barrels for the week ended June 4. Analysts are expecting this morning’s report to show a draw of 2.0 million barrels.
• The EIA released its Short Term Energy Outlook yesterday, stating that U.S. fuel consumption would grow by 1.49 million bpd this year vs the previous estimate of 1.39 million. The group also lowered its expected fall in U.S. crude production from a decrease of 290,000 bpd to 230,000 bpd.
• Sources are reporting that the current crack down by Chinese government in regard to the country’s bloated refining sector could cause imports to fall by 3%.
• The July crude oil contract is trading $0.30 higher at $70.35. The 20-day and 100-day moving averages are $66.60 and $61.18 respectively. The 14-day RSI is 67.85%.
• As of 8:00 am CST: July Brent is up $0.35 at $72.64, the U.S. dollar index is 0.082 lower at 89.994, while the nearby e-mini S&P 500 futures contract is up 6.75 points at 4232.5.

Diesel

• Yesterday afternoon the API reported a build of 3.8 million barrels, larger than the expected build of 1.4 million barrels.
• The July ULSD contract is trading $0.0081 higher at $2.1431. The 20-day and 100-day moving averages are $2.0587 and $1.8651, respectively. The 14-day RSI is 68.44%.

Gasoline

• Yesterday afternoon the API reported that gasoline stockpiles climbed by 2 million barrels, more than the average estimate of 700,000 barrels.
• ANZ Research analysts reported that traffic congestion data in 15 European cities had reached its highest level since the pandemic began.
• The July RBOB contract is trading $0.0132 higher at $2.2322. The 20-day and 100-day moving averages are $2.1502 and $1.9599, respectively. The 14-day RSI is 65.68%.

Propane

• Markets will keep a close eye on inventory data this morning as it looks for builds to support unseasonably low stocks.
• At last look, Conway propane was up $0.01850, trading at $0.9100. Mt. Belvieu was up $0.0200, trading at $0.9350. Overseas prices were seen jumping overnight, likely due to strength in crude and strong demand overseas.

Natural Gas

• The July Natural Gas contract is trading $0.023 higher at $3.151. The 20-day and 100-day moving averages are $3.043 and $2.894, respectively. The 14-day RSI is 63.27%.

Although demand recovery remains strong in western countries, Asia continues to face Covid-19 challenges, in turn hurting travel demand.