Outlook: Crude is heading for its first weekly decline since April. Gas and diesel are both trading lower with retail gas prices pulling back slightly while diesel prices set new records at the pump. The market took a macro focus this week with the Fed increasing interest rates by the largest clip since 1994 at 75 bps. Also in focus were the comments made hinting that the hike for July would be no greater than 75 bps. The US dollar index saw its largest decline since the covid drop in March of 2020. The decline allowed commodities to find strength throughout the day bringing crude off its low of $112.31. Crude traded in an $11 range this week and the volatility continues to push traders out with WTI open interest falling to its lowest levels since 2016. The key market movers have shifted with economic downturn going up against tightening petroleum inventories causing whipsaw trade at record price levels.
Crude
- Oil is heading for its first weekly decline since April.
- JPMorgan says the entire commodity complex is still a buy and could climb 10% in the coming months.
- US Energy Secretary Jennifer Granholm will meet refinery executives next Thursday.
- Yesterday, the US imposed sanctions on Chinese and Emirati companies along with several Iranian firms that help export Iran’s petrochemicals in a move that could pressure Iran to agree to nuclear deal terms.
- The IEA forecasts global demand will increase 2% next year to a record 101.6 million bpd.
- Chevron plans to spend about 2.5 billion building up its hydrogen business this decade on the path toward low-carbon technologies.
- Total refinery outages in the US were 313,000 bpd as of 6/16.
- Open interest in WTI futures continues to fall to its lowest level in six years.
- Baker Hughes will release their rig count at 12:00 CST.
- As of 7:55 am CST: Brent crude oil down $0.27 to $119.54, US dollar index up $0.880 to 104.511 while the nearby e-mini S&P 500 futures contract is up 18.25 to 3687.00.
Diesel
- The Nymex heating oil crack closed at its highest level in data since 1986 on Thursday.
- AAA reports the national average retail diesel price at $5.798 and a record high.
Gasoline
- The Biden Administration is considering measures concerning fuel exports amid rising prices across crude, gasoline, and diesel.
- AAA reports the national average retail gas price at $5.000.
Propane
- Conway is trading at $1.2050 and Belvieu is trading at $1.2200.
- The EIA reported propane stocks rose by 1.5 million barrels last week.
- Conway inventories rose by 1.1 million barrels.
- Conway is trading at 42% of crude, down from 63% in March.
- The US is exporting 59% of production as of 6/15.
Natural Gas
- Total US demand increased by 0.9 Bcf yesterday to 97.0 Bcf/d.
- The EIA reported an injection of 92 Bcf yesterday.
- Total storage is 13.4% below the 5-year average.
- Texas was expected to see record power demand on Thursday and Monday.
US Gulf Exports: Rising demand in Latin America is set to lift US Gulf Coast fuel exports to new highs this month while domestic inventories sit well below 5-year averages. Waterborne gas and diesel exports of the Gulf surged to 1.88 million bpd so far this month. Exports are up 27% from what they were in June 2019.
