Outlook: The energy complex is moving firmly lower this morning with WTI testing support near $70. News of a debt ceiling deal over the weekend has not provided much optimism with the threat of higher interest rates further stressing the economy. An additional negative demand signal is stemming from expectations that Saudi Aramco will lower its selling price for crude to Asia by 63 cents. Demand growth in China has been service sector focused which has yielded slower-than-expected growth. OPEC+ is scheduled to meet over the weekend but comments from Russia suggest that no further cuts are anticipated. A further selloff into the week could put more pressure on the producing group, however.
Crude
- President Biden and Republican House of Representatives Speaker Kevin McCarthy a debt ceiling deal that will suspend the $31.4 trillion ceiling for two years. The deal will still need to pass Congress before running into a default by early June.
- Russia’s 4-week average seaborne crude shipments fell for the first time in six weeks to 3.64 mbpd.
- Saudi Aramco may reduce its selling price of Arab Light crude by 63 cents for July sales to Asia.
- Kuwait’s Al-Zour refinery was set to bring on its third section in June, however, has now been delayed till the end of summer. The refinery will add 615,000 bpd of refining capacity.
- Money managers increased their net length for Brent crude by 30,000 contracts last week, which was the largest increase in two months.
- Baker Hughes reported US rig counts fell by 5 to 570 last week.
- Inventory reports will be delayed by one day this week due to the Monday holiday.
- As of 8:51 am CST: Brent crude oil down $2.75 to $74.30, US dollar index down $0.142 to 104.046 while the nearby e-mini S&P 500 futures contract is up 15.25 to 4228.00.
Diesel
- Russia plans to boost its diesel exports by over 30% with refiners coming out of maintenance. They plan to ship 527,000 bpd of diesel in June, according to Bloomberg.
- Singapore’s imports of gasoil or diesel-type fuels from Saudi Arabia have risen to a record 241,000 tons so far this month, according to Kpler data.
- ULSD-managed money traders increased their net length by 1,300 contracts and are net long 5,554 contracts.
- Tomorrow is LTD for June ULSD.
Gasoline
- The net spec and fund long in gasoline has fallen to levels in over a year.
- RBOB-managed money traders net bought 11,312 contracts and are net long 55,854 contracts.
- Tomorrow is LTD for June RBOB.
Propane
- Conway is trading at .6250 while Belvieu is trading at .6350.
- Conway is trading at 36% of crude.
- The US is exporting 52% of production as of 5/19/23.
Natural Gas
- Overnight weather runs added 2 CDDs through the two-week forecast.
- Friday, US natural gas demand rose to 90.0 Bcf/d.
- Yesterday, Bloomberg reported that Russia’s natural gas production fell 13% in the first four months of the year compared to last year.
Jet Fuel Demand: Global jet fuel demand has seen as steady of growth as any product off its 2020 lows. Demand is set to increase 0.5% in the coming week to 6.24 mbpd. Eastern and Western Europe are leading the growth this week, rising 3.3% and 1.7% respectively.
