Outlook: The energy complex is back to trading higher this morning after yesterday’s slight setback from disappointing product demand. Yesterday’s EIA report gave the market a slightly negative look at the beginning of the driving season. Demand numbers for products both fell during Memorial week and in turn caused large product builds. The benchmark WTI contract now sits back over $70, and near its highest levels since October 2018. Support stems from an upbeat demand forecast confirmed by OPEC’s monthly report this morning. The group continues to have a positive outlook from demand returning in the latter half of the year. Equities also trade higher this morning despite falling lower after the initial release of last month’s CPI data. Consumer prices in May were seen increasing at the fastest pace since the summer of 2008. The index rose by 5% compared to a year ago, the largest value since the 5.3% increase reported in August of 2008. While equities managed to reverse the short lived losses, investors will still continue to keep a close eye on inflation.
- OPEC released its monthly report this morning, sticking to its current forecast for oil demand recovery in 2021. The current demand forecast is set at an increase of 5.95 million bpd for 2021. The group cut its Q1 demand forecast, but in turn raised its forecasts for Q2, Q3, and Q4.
- India continues to see effects from recent coronavirus surges with oil demand falling by 11.3% in May from the previous month according to its Oil Ministry, and also down by 1.5% compared to a year earlier. Cases however decline and lead to expectations that areas of the country will begin to ease restrictions.
- Iran has increased their official selling price of its Iranian Light crude to Asia by 10 cents from the previous month.
- Yesterday, TC Energy Crop, finally ended its 16 year battle to build the Keystone XL Pipeline, officially ending the plans.
- The July crude oil contract is trading $0.30 higher at $70.35. The 20-day and 100-day moving averages are $66.79 and $61.36 respectively. The 14-day RSI is 67.50%.
- 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.
- The July ULSD contract is trading $0.0197 higher at $2.1492. The 20-day and 100-day moving averages are $2.0587 and $1.8651, respectively. The 14-day RSI is 68.44%.
- Reuters has reported that analysts saw gasoline exports from Asia to the United States increasing by 50% in May compared to April as Asian countries saw slowdowns in fuel usage due to Covid-19.
- The July RBOB contract is trading $0.0187 higher at $2.2212. The 20-day and 100-day moving averages are $2.1520 and $1.9655, respectively. The 14-day RSI is 63.24%.
- At last look, Conway propane was up $0.00500, trading at $0.9400. Mt. Belvieu was up $0.00750, trading at $0.9550. Prices continue their trend higher despite yesterday’s large increase in inventories.
- Warmer weather forecasts are currently balancing against an expected large build in the storage report this morning. Analysts were expecting a build of 95 Bcf for the week ending June 4.
- The July Natural Gas contract is trading $0.035 higher at $3.164. The 20-day and 100-day moving averages are $3.050 and $2.897, respectively. The 14-day RSI is 63.34%.
Traffic across the U.S. and Europe is now seen returning to pre-pandemic levels. South America also saw toll road traffic nearing levels seen in 2019.
|As of 8:30 AM CST||WTI July||ULSD July||RBOB July||Nat Gas July|