Outlook: The energy complex is mixed again to start today’s session with crude and diesel trading higher while gas lags behind. The EIA released its STEO report yesterday which included a higher revision for 2023 and 2024 oil production. The EIA recently revised its March oil production higher and the consensus remains that US oil production growth is at a better pace than expected. US oil rig counts have been on the decline which reinforces a significant growth slowdown in 2024. China released import/export data last night which showed declines for both, however, oil imports remain elevated despite a lack of domestic demand growth. The EIA will report weekly inventory stats this morning. Industry estimates are mixed for crude while products lean more towards consensus builds. If weekly demand readings come in soft again, the market may find bearish pressure post-report.
Crude
- Russian seaborne crude exports on a four-week average rose to 3.73 mbpd last week.
- Chinese May crude imports rose to the 3rd highest monthly level on record with a 12.2% y/y gain.
- China’s May exports shrank faster than expected with imports also declining.
- The EIA expects US oil output to increase by 720,000 bpd to 12.61 mbpd this year, up from a 640,000 bpd gain in the previous report.
- 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 1.0 million barrels last week.
- An industry survey yesterday afternoon showed crude stocks fell by 1.71 million barrels last week, according to sources citing the API.
- The EIA will report inventory data at 9:30 CT today.
- As of 8:22 am CST: Brent crude oil up $0.58 to $76.84, US dollar index down $0.226 to 103.889 while the nearby e-mini S&P 500 futures contract is up 5.25 to 4295.00.
Diesel
- Reuters estimates diesel stocks rose by 1.3 million barrels last week.
- An industry survey yesterday afternoon showed diesel stocks rose by 4.5 million barrels last week, according to sources citing the API.
Gasoline
- Reuters estimates gasoline stocks rose by 0.9 million barrels last week.
- An industry survey yesterday afternoon showed gasoline stocks rose by 2.4 million barrels last week, according to sources citing the API.
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.
- OPIS estimates propane stocks rose by 2.8 million barrels last week.
Natural Gas
- Overnight weather runs were unchanged through the two-week forecast.
- Yesterday, US natural gas demand rose to 94.6 Bcf/d.
- The EIA lowered its Henry hub natural gas forecast by nearly 9% for $2.66 for 2023.
- The EIA estimates natural gas production in April set a record of 104 Bcf/d, up from 102 Bcf in March.
Continuous Daily HO: The diesel market has struggled to break out of its range since early May. The contract has managed to trade above its 9-day moving average and the 50-day moving average is coming down within striking distance. Continuous daily diesel has not traded above its 50-day moving average since the end of January.
