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Outlook: The energy complex has taken a step back this morning after yesterday’s strong gains. The rally managed to push Brent crude up to $75 for the first time in 2 years.  This morning, crude is seen trading just slightly softer while products have since pushed higher. Market fundamentals remain supportive likely leading to additional upside risk as demand continues to outstrip supply. OPEC+ is set to meet next week to decide the next steps regarding global production. Traders will watch to see if the group looks to further boost production due to increasingly tightening supplies. According to Russian officials, Moscow may consider making a proposal for the group to ease the supply deficit and increase output. Additionally, progress continues lag in Iran and U.S. nuclear talks. Tehran now sees talks possibly extending beyond August after the recent election appointed Ebrahim Raisi as the new President. Markets will continue to watch for developments regarding both Iran and OPEC+ production.

Crude

• Citi Research increased its Brent price forecast for 2021 by $4 to $72 a barrel. The group also increased its 2022 price forecast by $8 to $67 a barrel.
• Crude oil prices across the global are rising due to stronger demand and tighter supply as physical markets catch up with the rallies in futures. This suggests that the futures market could see additional fundamental support going forward.
• As China’s government continues to crackdown on the oil sector, Chinese private oil refiners are expected to receive 35% less in crude import quotas compared to last year.
• The July crude oil contract is trading $0.38 lower at $73.28. The 20-day and 100-day moving averages are $69.52 and $62.59 respectively. The 14-day RSI is 69.38%.
• As of 8:25 am CST: July Brent is down $0.23 at $74.67, the U.S. dollar index is 0.087 higher at 91.986, while the nearby e-mini S&P 500 futures contract is up 2.00 points at 4215.75.

Diesel

• Cancellations of American Airlines flights due to maintenance and staff shortages has not been seen affecting the market yet. TSA checkpoint numbers continue to sit above 2 million travelers per day.
• The July ULSD contract is trading $0.0068 higher at $2.1336. The 20-day and 100-day moving averages are $2.1002 and $1.9124, respectively. The 14-day RSI is 60.51%.
  

Gasoline

• Both the U.S. and Brazil are expected to cut back on their ethanol production in coming months due to rising corn and sugar prices.
• The July RBOB contract is trading $0.0094 higher at $2.2063. The 20-day and 100-day moving averages are $2.1760 and $1.9898, respectively. The 14-day RSI is 59.86%.
  

Propane

• The USDA’s crop conditions report showed decreasing G/E ratings for both corn and soybeans. Corn fell from 68% G/E to 65% and soybeans fell from 62% G/E to 60%.
• At last look, Conway propane was up $0.00250, trading at $0.97750. Mt. Belvieu was unchanged, trading at $0.99000. 

Natural Gas

• Both European and Asian natural gas prices extended their gains during today’s session as supplies continue to be tight and hot weather boosts consumption.
• The July Natural Gas contract is trading $0.052 higher at $3.243. The 20-day and 100-day moving averages are $3.158 and $2.953, respectively. The 14-day RSI is 61.41%.
  

U.S. natural gas exports and non-power sector demand are expected to drive prices higher through 2022.