Outlook: Energies are mixed this morning with crude and diesel trading lower while gasoline clings to positive territory. The complex has all but rejected the move higher following OPEC’s recent cut over the weekend. Demand fears have grown, and additional cuts may be pushing traders to wonder what OPEC is seeing behind the scenes. The consensus remains that a global oil deficit develops throughout the second half of the year, but traders appear to be looking to trade that idea when it becomes factual. Scheduled reports for the week are on the light side, but we get back on track with the weekly EIA report to be released tomorrow at 9:30 CT. Reuter's early poll is suggesting inventory builds across the board; however, industry estimates have seen some significant variance over the last several weeks. After a soft weekly demand reading in the last report, the trade will be looking for a rebound to fend off further demand destruction concerns.
Crude
- The US energy secretary said after the OPEC+ decision, the US is going to work with all oil producers to seek lower prices for Americans.
- Citi says OPEC+ cuts are unlikely to push oil prices to be sustained in the $80s or low $90s and expects Brent to be range-bound near $81.
- US ISM services index fell 1.6 points in May vs an expected increase.
- The US SPR fell by 1.8 million barrels last week. 8 million barrels are left to be released as part of the recent 26 million barrels release.
- Reuters estimates crude stocks rose by 1.5 million barrels last week.
- The EIA will release its short-term energy outlook today.
- The API will report its inventory survey at 3:30 CT.
- As of 8:15 am CST: Brent crude oil down $1.51 to $75.20, US dollar index up $0.292 to 104.294 while the nearby e-mini S&P 500 futures contract is down 1.25 to 4279.00.
Diesel
- Reuters estimates diesel stocks rose by 2.2 million barrels last week.
- The prompt Nymex diesel crack is up nearly $5 since early May, trading over $28 today.
- Diesel profitability can see seasonal increases this time of year due to refiners focusing on gasoline supply.
- Reuters estimates gasoline stocks rose by 1.5 million barrels last week.
- US gasoline imports from Europe increased by 88% last week.
Propane
- Conway is trading at .6025 while Belvieu is trading at .6150.
- Conway is trading at 35% of crude.
- The US is exporting 53% of production as of 5/19/23.
- US propane exports hit 1.7 mbpd in March, the highest level since data was collected in 1973.
Natural Gas
- Overnight weather runs removed 9 CDDs through the two-week forecast.
- Yesterday, US natural gas demand rose to 91.9 Bcf/d.
- Dutch TTF rallied 24% yesterday but is down 4% today.
Continuous Daily WTI: After a firm rejection of its gap higher yesterday, the oil market is softening again. A close below the 9-day moving average today can be a negative short-term indicator. Macro fears are showing their pull this week despite fewer economic reports to feed off. Fed fund futures still suggest a 75% chance of an interest rate pause next week.
