Outlook: Energies are looking to take back yesterday’s losses as supply concerns outweigh the extended lockdowns and demand loss in China. Libya is experiencing significant supply disruption with 1.1 of their 1.2 million bpd average of oil production offline due to political protests. OPEC announced today that their 2022 forecast for non-OPEC oil production has dropped by 300,000 bpd. Dwindling spare capacity has magnified global supply disruptions with Russian supply being shunned by a growing majority of the globe. Beijing and Chaoyang are conducting mass testing after a resurgence of covid cases. A delayed return of Chinese demand is a bearish concern, but overall supply disruptions are overpowering crude and products today. Natural Gas has plummeted today following reports that the Freeport LNG facility won’t be operational for 90 days. The company has said it will resume partial operation within 90 days and return to full operation by the end of 2022. This is a longer-than-expected disruption to exports which may result if a glut of supply and prices have fallen over 15% today.
Crude
- President Biden is scheduled to visit the Middle East July 13th-16th. The Trip includes stops in Israel, West Bank, and Saudi Arabia.
- Russian oil output rose almost 5% in the first half of June compared with May according to the Interfax news agency.
- The Chinese capital’s most populous district, Chaoyang, kicked off a three-day mass testing event for its 3.5 million residents.
- OPEC reported their oil output fell by 176,000 bpd in May.
- OPEC cut the 2022 non-OPEC oil supply forecast by 300,000 bpd, lowering Russia’s liquids production forecast by 250,000 bpd.
- Libyan oil production is down 1.1 million bpd due to political protests.
- US Permian output reached 5.14 million bpd in May, up from its previous forecast of 5.13 million.
- Reuters is estimating a 1.2 million barrel draw in crude stocks for last week.
- The API will report their inventory survey at 3:30 CST.
- The Fed is scheduled to meet on Wednesday with estimates calling for a 50 or 75bp hike.
- As of 9:45 am CST: Brent crude oil up $2.84 to $125.11, US dollar index up $0.185 to 105.263 while the nearby e-mini S&P 500 futures contract is down 10.25 to 3742.00.
Diesel
- Reuters is estimating diesel inventories to be unchanged last week.
- A fire was reported at LyondellBasell Houston Refinery. An all-clear has been issued but damages have not yet been reported.
Gasoline
- Reuters is estimating an 800,000 barrel build in gasoline stocks for last week.
- Unpaid fuel incidents increased 22% in the first week of the month in the UK. 70% of cases were motorists claiming to not have enough money to pay the bill.
Propane
- Conway is trading at $1.2175 down 1.75 cents and Belvieu is trading at $1.2325.
- Conway is trading at 42% of crude, down from 63% in March.
- The US is exporting 42.6% of production as of 6/9.
Natural Gas
- Total US demand increased by 1.2 Bcf yesterday to 89.5 Bcf/d.
- Overnight weather runs added 3 CDDs for the two-week forecast.
- The EIA Drilling Productivity Report forecasts gas production will increase by 781 mmcf/d between June and July.
- TTF prices are up 6% after Gazprom cut Nord Stream flows by 40% due to technical issues.
- Freeport LNG announced they will be fully shut down for 90 days following the explosion last week. Full operation is not expected till the end of 2022.
Permian Production: Drillers in the Permian basin have increased production to fresh record highs dating back to 2007. Production has pushed to 5.14 million bpd up from 5.13 million bpd in the previous forecast. Inflation and higher costs are expected to stunt the overall growth of US oil production. 
