Outlook: Energies are retreating this morning with crude trading near even and products seeing marginal losses. With a lack of market-moving headlines, energy is likely finding weakness from a higher dollar index and lower equities. Rising inflation and concern over macroeconomic growth remain in the back of the minds of traders following bullish rallies. Despite some weakness in RBOB futures over the last few days, the national average retail gas price continues to climb nearing $5 milestone at $4.91. This month, product exports out of the Gulf Coast are on a record pace as domestic inventories continue to tighten. Products exiting the Gulf to Europe may continue to put additional pressure on record low east coast inventories that partially rely on the colonial pipeline to receive supply. Reuters poll suggests a 1.8 million barrel draw in crude stocks last week, while products are estimated to see small builds. The API survey will give a second opinion this afternoon ahead of the weekly EIA report tomorrow morning.
Crude
- Oil is tracking lower with equities amid economic growth fears.
- Libya’s biggest oilfield halted production shortly after restarting yesterday due to gunmen storming the field.
- Beijing reported 2 new covid cases yesterday growing closer to their zero-tolerance target.
- US waterborne crude imports fell by 458,000 bpd to 1.72 million bpd last week according to Bloomberg data.
- US crude exports fell to 3.24 million bpd in April, down from 3.32 million bpd in March.
- Morgan Stanley estimates the oil market will be in a deficit of 500,000 bpd during the second half of the year.
- Reuters is estimating a 1.8 million barrel draw in crude stocks last week.
- The API will report their inventory survey today at 3:30 CST
- As of 8:45 am CST: Brent crude oil down $0.06 to $119.45, US dollar index up $0.238 to 102.675 while the nearby e-mini S&P 500 futures contract is down 23.25 to 4097.00.
Diesel
- Reuters is estimating a 600,000 barrel build in diesel stocks last week.
- Diesel exports out of the golf hit 1.12 million bpd in the first 6 days of June.
- Middle distillate stocks in Singapore, which include diesel and jet fuel, are at their lowest seasonal levels since 2004.
Gasoline
- Reuters is estimating a 300,000 barrel build in gasoline stocks last week.
- Gasoline and diesel exports out of the gulf totaled 1.94 million bpd in June, on pace to be the highest since the data began in 2015 according to Vortexa.
Propane
- Conway is trading at $1.2275 and Belvieu is trading at $1.2500.
- The US is exporting 57% of propane production.
- Midwest propane inventories remain 14.4% below the 5-year average.
Natural Gas
- Total US demand increased by 0.6 Bcf yesterday to 85.9 Bcf/d.
- Reuters is estimating an inventory injection between 87-97 Bcf last week.
- Overnight weather runs added 3 CDDs to the two-week forecast.
- LNG on floating tankers for at least 20 days fell by 23% on a week-over-week basis.
- Total inventories sit at 1,902 Bcf and the deficit to the 5-year average expanded to 337 Bcf.
Asia Refining Profits: Asia’s oil refiners are seeing record profits making diesel as supply continues to tighten against surging global demand. Margins are at record levels dating back to 2018. Sanctions against Russia are expected to continue and could further tighten the global market.
