Outlook: The energy market is starting the morning higher with RBOB again leading the complex while WTI and ULSD trail with gains. Saudi Energy Minister Prince Abdulaziz bin Salman gave another warning to speculators who may be shorting the oil market. They previously noted that short sellers would be hurting after the OPEC+ surprise hike at the last meeting. The group is scheduled to meet in two weeks, however, no additional production adjustments are expected as of now. The market is beginning to recognize the supply and demand shift following OPEC’s recent cut, with data suggesting exports are down nearly 2 million barrels. With the expiration of the June WTI contract, the prompt spread between July and August shows backwardation of nearly 10 cents, reflecting the tightening complex. RBOB has been the strongest leg this week ahead of what’s expected to be a heavily traveled holiday weekend. Providing additional support are reports that Russia is considering a gasoline export ban. While the US doesn’t currently buy gas directly from Russia, it could disrupt the trade balance if it materializes.
Crude
- Saudi Arabia’s Energy Minister gave another warning to short sellers of oil with OPEC+ scheduled to meet in two weeks.
- Kazakhstan curtailed production by 100,000 bpd after rising levels of hydrogen sulfide were found at the production island.
- According to Kpler, OPEC+ month-to-date crude exports are down 2 mbpd from April.
- ESAI estimates between 240k-280k bpd of Canadian oil production has been halted as a result of wildfires.
- Including maintenance, Alberta’s total oil production in May is seen down by 480,000 bpd.
- US debt ceiling discussions are set to continue today after failing to reach a resolution last night.
- WTI’s prompt spread flipped back to backwardation following the expiration of the June contract yesterday.
- The US SPR fell by 1.7 million barrels last week.
- Reuters estimates US crude stocks rose by 500,000 last week.
- As of 7:28 am CST: Brent crude oil down $1.00 to $76.99, US dollar index up $0.307 to 103.505 while the nearby e-mini S&P 500 futures contract is down 8.25 to 4196.00.
Diesel
- Reuters estimates US diesel stocks rose by 500,000 barrels last week.
- US TSA passenger throughput rose to a post-pandemic high of 2.66 million on Friday.
Gasoline
- Reuters estimates US gasoline stocks fell 1.1 million barrels last week.
- Russia is considering an export ban on gasoline to prevent domestic fuel shortages after the government's decision to reduce subsidies for refineries.
- US imports of European gasoline rose to 465,000 bpd last week and the highest level in 7 months.
Propane
- Conway is trading at .6375 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.
- US Corn planting was reported at 81% complete vs 75% avg.
Natural Gas
- Overnight weather runs were unchanged through the two-week forecast.
- Yesterday, US natural gas demand rose to 91.5 Bcf/d.
- Cameron LNG in Louisiana resumed production on Train 2 of its three-train export plant following planned maintenance that began on April 28th
Continuous Daily RBOB: With another strong session in the works today, RBOB may look to close above its upper Bollinger Band. A close above this level can be an indication of an overbought market. Strong buying ahead of the holiday weekend which also expects record travel may resist selling.
