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Outlook: The energy market experienced mixed trade overnight in front of this morning's Weekly Petroleum Status Report. Crude oil has traded both sides of even this morning and now sits just slightly higher on the day. Product markets on the other hand trade weaker due to large builds on yesterday’s API report. Equities remain relatively flat as investors look towards headlines regarding the Fed meeting. The Federal Reserve is not expected to make any policy changes but may change its view on the current rising inflation and possibly slow down its bond buying program. Continued economic recovery across the globe coupled with large reductions in crude inventories keeps crude prices near their highs. Headlines have reported recoveries in Indian fuel demand after recent restrictions due to surges in Covid-19. Many analysts continue to see crude prices rising further due to these increases in demand while supplies lag behind. Investors will now look towards this morning’s updated EIA inventory report to see if yesterday’s API numbers are confirmed.

Crude

• Yesterday the API reported that crude stocks saw a massive draw of 8.5 million barrels for the week ended June 11. Analysts are expecting this morning’s report to show a draw of 3.3 million barrels.
• China’s retail sales in May increased by 12.4% compared to last year vs a 12.8% estimate and last month’s increase of 17.7%. Industrial output was up 8.8% vs 8.6% estimate and 9.8% last month.
• A strong rebound in fuel demand has caused Asian refiners to pay the highest premiums for Russian and Middle Eastern crude oil in about one year.
• China’s daily crude processing rose by 4.4% in May, YoY, to a new record high. Refining margins were supported by Beijing’s announcement of new taxes which are expected to help cut supplies of both gasoline and diesel fuel.
• The July crude oil contract is trading $0.01 lower at $72.11. The 20-day and 100-day moving averages are $68.04 and $62.14 respectively. The 14-day RSI is 72.53%.
• As of 8:15 am CST: July Brent is up $0.18 at $74.17, the U.S. dollar index is 0.002 higher at 90.538, while the nearby e-mini S&P 500 futures contract is up 0.75 points at 4237.25.

Diesel

• Yesterday afternoon the API reported a build of 1.96 million barrels for distillate stocks, larger than the expected build of 200,000 barrels.
• The July ULSD contract is trading $0.0201 lower at $2.0922. The 20-day and 100-day moving averages are $2.0763 and $1.8908, respectively. The 14-day RSI is 55.46%.

Gasoline

• India’s fuel sales were seen rebounding for the first half of June due to easing coronavirus restrictions. Gasoline sales were 13% higher for June 1-15 compared to last month, and Diesel sales were 12% higher.
• Yesterday afternoon the API reported that gasoline stockpiles climbed by 2.85 million barrels, analysts had called for a draw of 600,000 barrels.
• The July RBOB contract is trading $0.0236 lower at $2.1469. The 20-day and 100-day moving averages are $2.1540 and $1.9677, respectively. The 14-day RSI is 51.39%.

Propane

• According to an OPIS survey, analysts expect this week's inventory data from the EIA to should a build in propane stocks of 2.84 million bbl. As of last week's inventory report, stocks were down 19.1% year on year.
• At last look, Conway propane was down $0.00300, trading at $0.94250. Mt. Belvieu was unchanged, trading at $0.95250.

Natural Gas

• The natural gas market is seeing a slight pullback likely due to a more moderate short-term temperature forecast in the mid-continent after the recent extreme heat. Forecasts however still show warmer than usual temps for much of the western continent.
• The July Natural Gas contract is trading $0.030 lower at $3.210. The 20-day and 100-day moving averages are $3.089 and $2.919, respectively. The 14-day RSI is 57.99%.