Outlook: Energies are rebounding today after a steep selloff last week and light holiday trade yesterday. Nearby crude tested the 50-day moving average but has since bounced back trading above $110. The July contract is set to expire today with around a dollar inverse to August. Products are also seeing a rebound as elevated refinery rates leave little room for supply growth in a market where inventories sit at a deficit to the 5-year averages. Global demand is expected to grow with the summer driving season in full swing and China emerging from lockdowns. Russian crude continues to find its way to the market with buyers taking advantage of the discounted pricing. The US Treasury secretary recently floated the idea of capping Russian oil prices in an effort to keep the world supply steady while still sanctioning Russia financially. It appears there are many obstacles to this proposition coming to fruition, however. Inventory reports are delayed by a day this week due to the holiday. The API will release its survey on Wednesday and the EIA will report on Thursday.
Crude
- China’s imports of Russian Urals reached a two-year high of 270k bpd in May.
- Europe’s crude imports from Russia rose to 1.8 million barrels last week.
- Libya’s oil production has risen to 800,000 bpd according to their energy minister after being nearly fully shut down due to protests.
- Ecuador’s crude exports could fall by 130,000 bpd by the end of the month due to protests.
- Saudi Arabia’s April crude exports rose to a two-year high of 7.382 million bpd.
- US Treasury Secretary Janet Yellen proposed the idea of capping Russian oil prices as a replacement for embargoes.
- 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.
- Exxon Mobil said global markets may remain tight for 3-5 years due to lack of investment since the pandemic.
- The last trade day for the July WTI contract is today.
- Baker Hughes reported oil rigs increased by 4 to 584 last week.
- The net spec and fund long positions for crude are near their lowest levels since March 2020.
- As of 8:40 am CST: Brent crude oil up $1.22 to $115.35, US dollar index down $0.383 to 104.317 while the nearby e-mini S&P 500 futures contract is up 78.25 to 3754.00.
Diesel
- 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.
Gasoline
- The UK is seeing a surge in road traffic due to a nationwide train strike.
- Gasoline inventories are 26 million barrels below the 5-year average.
Propane
- Conway is trading at $1.2200 and Belvieu is trading at $1.2350.
- 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 3.3 Bcf/d yesterday to 89.9 Bcf/d.
- Overnight weather runs removed 10 CDDs through the two-week forecast.
- The Netherlands announced allowance for increased coal usage for power as they move away from Russian gas supply.
Russian Exports: Russia’s oil continues to find a home despite the sanctioning it has faced. Over half of their seaborne exports are heading to Asia while Europe’s Russian imports increased to 1.8 million bpd. Buyers are taking advantage of the discounted product and producing fuel at record margins.
