Outlook: Crude is trading lower this morning while gas and diesel are seeing marginal gains. We are seen light trade across the complex today with most markets closed in observance of the Juneteenth holiday. The July WTI contract expires tomorrow and is currently trading near the 50-day moving average of $109.50. Reports of increased imports of Russian crude in China and increases in Libyan production are helping crude hold losses this morning. Diesel continues to show resiliency to downside moves and is up nearly 10 cents today. Diesel crack spreads continue to trade near record levels which favors the production of diesel over gasoline with diesel trading at a 64-cent premium over gas. The diesel market has less elastic demand in relation to high prices, however, DEF shortages projected this summer could pull trucks off the road. Overall market fundamentals remain tight which may bring upside pressure against concerns over macroeconomic health.
- China’s imports of Russian Urals reached a two-year high of 270k bpd in May.
- China is currently the fourth biggest buyer of Russian oil behind India, the Netherlands, and Italy.
- Libya’s oil production has risen to 800,000 bpd according to their energy minister after being nearly fully shut down due to protests.
- Saudi Arabia’s April crude exports rose to a two-year high of 7.382 million bpd.
- Middle East refiners will process 8.8 million barrels a day of crude in 2023 according to IEA estimates, which is a 1 million bpd increase from 2019.
- The last trade day for the July WTI contract is 6/21.
- Baker Hughes reported oil rigs increased by 4 to 584 last week.
- As of 9:30 am CST: Brent crude oil down $0.57 to $112.55, US dollar index down $0.322 to 104.378 while the nearby e-mini S&P 500 futures contract is up 32.25 to 3708.00.
- Global passenger jet fuel demand rose by 3% week-on-week.
- European imports of refined fuels from the US are expected to decline in June according to Bloomberg.
- The Biden Administration is considering invoking Cold War-era laws to boost production in idled facilities.
- AAA reports the national average retail gas price at $4.981.
- Conway is trading at $1.2050 and Belvieu is trading at $1.2200.
- Conway is trading at 42% of crude, down from 63% in March.
- The US is exporting 59% of production as of 6/15.
- The EIA reported an injection of 92 Bcf last week.
- Total storage is 13.4% below the 5-year average.
- Texas is expected to see record power burn today.
Saudi Oil: The world’s largest oil exporter saw an increase in April crude production of 141,000 bpd in April. Crude exports increased by 2% to 7.382 million barrels in April. Saudi Arabia is on track to lift oil production capacity by more than 1 million bpd to 13 million bpd by the end of 2026.