Morning Highlights
Morning Highlights

6-6-22 Energies Higher to Start the Week


Michael Dix

Jun 6, 2022

 

 

Outlook: Energies are trading higher this morning as Saudi Arabia increases their prices in Asia. This is showing that the oil giant believes the market has room to move higher without demand being hurt. Meanwhile, consumers are faced with record-high prices at the pump all around the world. Demand has yet to give in and prices will continue to push higher until they find that point.

Crude

  • Saudi Arabia increased its oil prices for Asia signaling strong demand in the market despite high prices.
  • India is looking to increase its imports of Russian oil at a discount. The increase in imports would alleviate some of the displacement caused by the EU embargo on Russia.
  • Libya’s largest oil field resumed production after almost two months of downtime. The field can produce 300,000 bpd.
  • France among other countries is having discussions with the UAE about the possibility of increased oil and diesel production and looking to fill the gap left by Russia.
  • Russia plans on exporting 30 cargoes of Urals which is down four from the same period the month prior.
  • Asian imports of Russian naphtha dropped to record lows.
  • Last week’s US rig counts were unchanged at 574.
  • Global crude flows were 1.2 million barrels lower per day due to the Chinses lockdowns.
  • On Tuesday the EIA will release its short-term energy outlook at noon.
  • As of 8:54 am CST: Brent crude oil is up $0.15 to $119.82, the US dollar index down $0.012 to 102.127 while the nearby e-mini S&P 500 futures contract is down 36 to 4143.00.

Diesel

  • Diesel cracks in Asia have hit all-time highs as demand returns following the Chinese lockdowns.
  • Memorial Day air traffic was 250,000 shy of 2019 at 2.19 million people and above last year’s traffic number of 1.79 million.

Gasoline

  •  Implied demand has reached 9 million barrels per day. There has not been the jump in demand that we normally see this time of the year. This could be the first sign that demand may be feeling some stress from consumers.
  • Inventories are 15 million barrels below last year and 23 million barrels lower than the five-year average.

Propane

  • Prices are at the lower end of the four-month range however, they are still above seasonally high averages.
  • Conway is at $1.2300 and Belvieu is at $1.2550

Natural Gas

  • Storage is 15.1% below the five-year average.
  • The forecast is showing cooler than average temps.
  • The market has whipsawed back and forth from above nine dollars to below 8 dollars for the better part of the last two weeks.

Asian Diesel Crack: The profitability of refining oil into diesel in Asia has taken off as the end of the lockdowns start. This comes even as the price of oil has taken off.