Morning Highlights
Morning Highlights

6-13-22 Equities Drag Commodities Lower


Michael Dix

Jun 13, 2022

 

 

Outlook: Energies are lower this morning as equities turn down sharply. That combined with a strong US dollar has driven commodities lower to start the week. News in the energy complex is still bullish outside of Chinese lockdowns. Lack of production still has a very strong grip on the world supply and does not have an easy solution in the near-term.

Crude

  • Saudi Arabia has cut its oil flows into China as it completes other commitments in Asia.
  • Libyan production has fallen 1.1 million barrels per day to 100,000 barrels produced per day.
  • Beijing has continued several lockdowns with more in Singapore as well.
  • President Biden said that any meetings with Saudi Arabia will focus on more than just energy.
  • Iran and Venezuela agree to further help each other produce oil as well as build their militaries.
  • The potential oil worker strike was avoided in Norway as the two sides reached an agreement.
  • Iran says a nuclear deal is still in reach. The US has made little to no effort since talks broke down earlier this year.
  • Floating storage was up 12% over the last week.
  • As of 9:20 am CST: Brent crude oil is up $0.57 to $121.10, the US dollar index up $0.001 to 102.325 while the nearby e-mini S&P 500 futures contract is down 14 to 4144.75.

Diesel

  • 1000’s of truckers in South Korea have slowed the entire economy as they are still on strike in hopes of more favorable work agreements.
  • Airline travel costs have skyrocketed this year, but air travel is still only slightly lower than it was in 2019.

Gasoline

  • British drivers are paying upwards of $125 USD to fill up the average tank.
  • US average gas prices climbed over $5 for the first time ever. When adjusted for inflation this is not the all-time high value but still, the highest price ever seen.

Propane 

  • Propane traded in a 5-cent range last week as the market looks to evaluate the larger-than-expected start to the build season.
  • Conway is at $1.2275 Belvieu is at $1.2350

Natural Gas

  • Texas is likely to set a new demand record with record temps moving into the area.
  • 6-10 and 8-14 day forecasts are expecting above-average temps from the Rockies all the way to the East Coast.
  • Baker Hughes gas rig counts are at their highest levels (151 rigs) since September 2019.

 

Rig Counts: Baker Hughes rig counts continue their steady increase week over week. The problem is that the increases are not coming fast enough, and production has fallen drastically behind demand. The result has been large price increases.