Outlook: Crude and products are edging higher to start the morning. Recession concerns continue to dominate headlines with the Biden administration proposing a gas tax holiday and Fed Chair Jerome Powell talking about a weak economic outlook. Powell also noted that a soft landing will be very challenging as interest rates continue to climb. Oil headlines have taken a backseat with significant outages in Libya having little effect on the market. There is also speculation that China and India are buying more Russian products than previously believed meaning the global market supply has increased. In the past 10 days, three Russian cargoes have disappeared from vessel-tracking systems where it’s believed they’re transferring consignments into other vessels. Domestic inventory estimates have a wide range ahead of the EIA report. The EIA report has been further delayed due to a system error and it’s unclear when the data will be published.
Crude
- WTI has fallen by nearly 15% since June 8th.
- Libya’s crude production has fallen again to 600,000 bpd or less due to protests.
- Russian oil cargos are increasingly disappearing in the Atlantic Ocean with speculation that product is being transferred while off the grid.
- Citigroup Inc says there’s about a 50% chance the world economy will enter a recession.
- Bloomberg Intelligence believes oil has a greater chance to fall to $50 rather than climb to $150.
- Both Brent and WTI closed below their lower Bollinger bands on Wednesday for the first time since December.
- WTI open interest fell again to new lows at 2016 levels following the recent selloffs.
- The API survey showed a 5.6 million barrel build in crude stocks for last week.
- Reuters estimates a 600,000 barrel draw in crude stocks last week.
- The EIA inventory report has been delayed due to technical difficulties.
- As of 8:15 am CST: Brent crude oil up $0.14 to $111.88, US dollar index up $0.265 to 104.462 while the nearby e-mini S&P 500 futures contract is up 21.25 to 3784.00.
Diesel
- The API survey showed a 1.7 million barrel draw in diesel stocks for last week.
- Reuters estimates a 300,000 barrel build in diesel stocks last week.
- Global airline activity is still 15% lower than pre-pandemic levels.
Gasoline
- The API survey showed a 1.2 million barrel build in gasoline stocks for last week.
- Reuters estimates a 500,000 barrel draw in gasoline stocks last week.
- The White House is calling for a 3-month suspension of the 18-cent federal gas tax.
Propane
- Conway is trading at $1.1925 and Belvieu is trading at $1.2150.
- Conway is trading at 47% of crude.
- The US is exporting 59% of production as of 6/15.
Natural Gas
- Total US demand fell by 0.9 Bcf/d yesterday to 93.2 Bcf/d.
- Overnight weather runs removed 3 CDDs through the two-week forecast.
- The EIA is expected to announce a 70 Bcf injection.
- The 5-year average injection is 82 Bcf.
Continuous WTI: Nearby crude has closed below the lower Bollinger band for the first time since December. Trading near or below the lower Bollinger band can be an indicator of oversold markets. Crude prices have fallen nearly 15% over the last two weeks following two significant selloffs.
