Outlook: The energy complex looks relatively undecided this morning while crude and products hold marginal gains. Market-driving headlines have really slowed down today and we may need some fresh influence to help decide where we go from here. On the economic side, reports will stay light through the end of the week. Chinese CPI data tonight could provide some influence if there’s enough variance from the consensus. Fed decision conversations will gain momentum heading into the meeting next week. The consensus remains that the Fed will pause interest rates this month however that narrative can shift quickly. A less aggressive track from the Fed could allow market focus to shift towards the fundamental tightness that is expected to develop through the end of the year.
Crude
- Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman spoke over the phone yesterday to discuss cooperation within the OPEC alliance yesterday.
- The IMF estimates Riyadh will need an oil price of $81 to balance the Saudi books this year.
- After cutting production by 170,000 bpd due to a leak, the Kashagan oil field in Kazakhstan has started to gradually increase production again.
- The Fed fund futures are pricing in a 64% chance the Fed will pause interest rate hikes next week.
- A Reuters poll of 86 economists showed 78 in favor of the Fed holding interest rates steady next week.
- The Fed will meet June 13-14th.
- The EIA reported US crude stocks fell by 450,000 barrels last week.
- US crude production rose by 200,000 bpd to 12.4 mbpd
- As of 7:50 am CST: Brent crude oil up $0.37 to $77.32, US dollar index down $0.481 to 103.618 while the nearby e-mini S&P 500 futures contract is up 3.25 to 4277.00.
Diesel
- The EIA reported diesel stocks rose by 5 million barrels last week.
- 4-week average diesel demand is 0.6% higher than year-ago levels.
- Suncor’s Commerce City refinery in Colorado completed maintenance work this week and may push refinery run rates even higher after hitting 5-year seasonal highs last week.
Gasoline
- The EIA reported gasoline stocks rose by 2.7 million barrels last week.
- 4-week average diesel demand is 1.8% above year ago levels.
- Traffic levels in China fell by 1.9% last week while North American traffic surged by 8.9% w/w, according to Bloomberg data.
Propane
- Conway is trading at .6025 while Belvieu is trading at .6150.
- Conway is trading at 35% of crude.
- The US is exporting 58% of production as of 6/2/23.
- The EIA reported propane stocks rose by 1.6 million barrels last week.
Natural Gas
- Overnight weather runs were added 1.5 CDDs through the two-week forecast.
- Yesterday, US natural gas demand flat at 94.6 Bcf/d.
- The EIA is expected to report a 114 Bcf injection into storage for last week.
- Canadian gas production is estimated at 17.7 Bcf/d, down from 18 Bcf/d due to wildfires.
Continuous Daily RBOB: The gasoline market is on pace for a strong week and is working to challenge its May highs. $2.7342 marks the high on May 26th and will be the short-term upside target to keep an eye on. Prices at the pump likely won’t find relief given the quick rebound in futures this month.
