Outlook: The energy market is looking for direction this morning with crude and products bouncing around near even. Progress with debt ceiling discussions failed to materialize over the weekend with some reports even hinting at regression. Every day that passes this week without a deal will likely weigh heavier on the marketplace. Market consensus, however, is that a deal of some form will be reached for defaulting. Global fundamentals are beginning to shift according to Goldman Sachs. Global oil stocks appear to be falling as anticipated just ahead of the second half of the year. OPEC+ production cuts appear to be reflected in falling exports among members. This may grab more of the market's attention if the macro environment cools off near term.
Crude
- Global oil inventories have begun to draw down, signaling a turning point for the oil market, which has been expected to tighten in the second half of the year according to Goldman Sachs.
- Russian refineries processed 5.34 mbpd of crude in the first two weeks of May, down 372,000 bpd from February levels.
- Bloomberg tanker tracking data shows Russia’s seaborne oil flows in May are 268,000 bpd above February levels.
- India’s crude imports fell 8.3% y/y to 19.8 million tons in April according to their government data.
- G7 leaders on Saturday pledged
- WTI’s prompt spread closed at the weakest level since late March on Friday.
- June WTI is set to expire today.
- Baker Hughes reported US oil rigs fell by 11 to 575 last week.
- As of 8:00 am CST: Brent crude oil down $0.09 to $75.49, US dollar index down $0.025 to 103.163 while the nearby e-mini S&P 500 futures contract is up 1.25 to 4206.00.
Diesel
- In China, domestic flights are expected to increase by 6.1% over the next four weeks, according to Bloomberg.
- Last week’s COT report showed heating oil managed money traders added 7,117 contracts and are net long 5,362 contracts.
Gasoline
- Total European gasoline in storage dropped 3% last week, primarily due to strong exports to the US.
- Last week’s COT report showed RBOB managed money traders added 5,209 contracts and are net long 44,542 contracts.
Propane
- Conway is trading at .6425 while Belvieu is trading at .6450.
- Conway is trading at 37% of crude.
- The US is exporting 65% of production as of 5/12/23.
Natural Gas
- Overnight weather runs removed 10 CDDs through the two-week forecast.
- Yesterday, US natural gas demand fell to 90.6 Bcf/d.
- Baker Hughes reported US nat gas rigs remained flat last week at 141.
Russian oil exports: Russia’s four-week average oil exports rose for a sixth straight week through May 19th. Shipments are up 15% since April and are nearing 4 mbpd. Most of the volumes are still heading to China and India. Another week passes with no signs of the pledged 500,000 bpd production cut.
