Outlook: The energy complex is mixed to start the morning with crude and diesel edging higher while gasoline is off by over 2 cents. The market seems undecided on where to go from here with the rangebound trading pattern remaining steady. Chinese stimulus can be a bullish driver, but given the lack of performance in demand growth this year, traders will likely look to trade the fact rather than the rumor. The EPA finalizes blending mandates today for the next 3 years. Volumes are set for 20.94 billion gallons in 2023, 21.54 billion gallons in 2024, and 22.33 billion gallons in 2025. The volumes were slightly higher than the EPA’s initial proposal but overall are seen as disappointing to the trade. Investments in the renewable fuels industry have been substantial and current mandates raise the concern that there may be idle capacity. Inventory stats are delayed by a day due to the holiday so the EIA will report inventory data tomorrow morning at 10:00 am CT.
Crude
- Oil exports from Iran in May rose 1.55 mbpd, marking the highest level in over 5 years.
- India’s imports of Russian oil hit a record 1.95 mbpd in May, according to Reuters.
- Canada’s government projections estimate Canada’s crude production would fall 22% from 5mbpd by 2050 if Canada achieves net zero.
- Iran’s lead nuclear negotiator said he had “serious and constructive” meeting with the European Union’s main envoy regarding the removal of sanctions.
- Fed Chair Jerome Powell will appear before the House Financial Committee at 9:00 am CT.
- Reuters estimates US crude stocks fell by 400,000 barrels last week.
- The API will report its inventory survey at 3:30pm CT.
- The EIA will report inventories tomorrow at 10:00am CT
- As of 8:20 am CST: Brent crude oil up $0.08 to $76.69, US dollar index up $0.207 to 102.450 while the nearby e-mini S&P 500 futures contract is down 7.25 to 4446.00.
Diesel
- Reuters estimates US diesel stocks rose by 800,000 barrels last week.
- The EPA finalized a deal yesterday that will require the use of 2.82 billion gallons of biomass-based diesel in 2023. This is a 2.2% increase over last year's mandate.
- The biomass requirements are well below the increases expected by producers with multi-billion-dollar investments in the industry at risk.
Gasoline
- Reuters estimates gasoline stocks fell by 200,000 barrels last week.
- The EPA will limit the amount of conventional ethanol to fulfill quotas in 2024 and 2025 to 15 billion gallons, down from 15.25 billion it had proposed earlier.
Propane
- Conway is trading at .5500 while Belvieu is trading at .5725.
- Conway is trading at 33% of crude.
- The US is exporting 63% of production as of 6/9/23.
Natural Gas
- Overnight weather runs removed 5 CDDs the two-week forecast.
- Yesterday, US natural gas demand fell to 93.2 Bcf/d.
Prompt WTI Spread: The prompt crude spread spent June in Contango, but with the expiration of the July contract, the spread has flipped back into backwardation. A tightening spot market may allow this spread to stay firm, especially with SPR releases ending this month.
