Outlook: Energies are quiet this morning as we head into the long holiday weekend. Crude is on track for its fifth consecutive week of gains if it can close above $110.56 today. Headlines have been slow this week but should pick up again next week. The EU is scheduled to meet and discuss additional sanctions against Russia next week. Whether or not an oil embargo is part of the sanctions will be determined if a deal can be struck with Hungary. Hungary is seeking financial compensation to revamp its refineries in the absence of Russian products before casting a vote of approval for the embargo. OPEC+ is also scheduled to meet next week and it’s expected they will move forward with a 432,000 bpd increase in production. Overall, we continue to see a bullish outlook for energies. If momentum continues next week, crude may look to push through $115, which has acted as resistance this week. Products may look to test $4, where both have been earlier this month.
- China may export excess fuel that they have accumulated due to decreased demand during their covid lockdowns.
- The Biden administration is reaching out to the oil industry to inquire about restarting shuttered refineries.
- Germany’s Economy Minister Habeck said during G7 talks that the EU can still reach a deal on the Russian oil embargo in the coming days.
- OPEC+ is expected to stick with their production target of 432,000 bpd for July.
- Nigeria plans to ship 60,000 bpd of crude in July, down from 109,000 bpd in June.
- The WTI December 2022-2023 spread hit its most backwardated level on record at $14.62.
- Baker Hughes will report their rig count at 12:00 CST.
- As of 8:50 am CST: Brent crude oil up $0.48 to $117.88, US dollar index down $0.144 to 101.685 while the nearby e-mini S&P 500 futures contract is up 50.25 to 4106.00.
- AAA reports the national average diesel price sits at $5.577.
- Diesel inventories sit at 28.993 million barrels below the 5-year average.
- Average total distillate demand over the past four weeks is down 7.2% compared to last year.
- AAA reports the national average gasoline price sits at $4.599.
- Gasoline inventories sit at 18.269 million barrels below the 5-year average.
- Average total gasoline demand over the past four weeks is down 2.71% compared to last year.
- Conway is trading at $1.22 and Belvieu is trading at $1.2400.
- Propane hubs saw strength fueled by Crude yesterday trading up over 5 cents.
- Traders covering end-of-month short positions aided to strength yesterday.
- Total US demand declined by 0.6 Bcf/d yesterday to 87.7 Bcf/d.
- The EIA reported a less than expected build of 80 Bcf for last week.
- The 5-year average injection for this time period is 97 Bcf.
- Total inventories sit at 1,812 Bcf and the deficit to the 5-year average expanded to 327 Bcf.
Refinery Outages: Global refinery outages reached 811,000 bpd as of May 26th. This compares to 1.09 million bpd during the previous week according to Bloomberg. Outages in the US were at 149,000 bpd.