Outlook: The energy complex is under pressure again as it heads for weekly losses. Crude and products are all off over 2% as the gloomy macroeconomic scene weighs in. The US dollar is working higher today which may be pressuring commodities as it makes it more expensive for non-dollar currency holders to purchase dollar-based commodities. The EU released its 11th round of sanctions against Russia today as it targets under-the-radar Russian crude oil transfers. The so-called “shadow fleet” has been a key instrument in maintaining export flows for Russia. Players like India continue to take advantage of discounted Russian oil prices and reported their imports in May rose 2% from a year earlier. India’s demand growth remains steady in the shadow of China’s fluctuating growth expectations.
Crude
- The EU imposed new sanctions today that target offshore tanker transfers of Russian crude and banned flows through the Druzhba pipeline. There are currently 443 ships in the “shadow fleet” that transfer Russian crude.
- Energy executives expect a WTI oil price of $77 by year-end 2023, according to the Dallas Fed Energy Survey.
- More than half of energy executives from the Dallas Fed Energy Survey say tighter credit is not an impediment.
- The EIA reported US crude stocks fell by 3.831 million barrels last week.
- US crude exports rose by 1.2 mbpd (39%) w/w.
- US crude production fell by 200,000 bpd last week to 12.2 mbpd.
- Baker Hughes will report its rig count at 12:00 CT.
- As of 7:50 am CST: Brent crude oil down $1.37 to $75.75, US dollar index down $0.026 to 102.045 while the nearby e-mini S&P 500 futures contract is down 9.25 to 4400.00.
Diesel
- The EIA reported diesel stocks rose by 434,000 barrels last week.
- US diesel stocks are 18.8 million barrels below 5-year seasonal levels.
- US diesel demand rose by 404,000 bpd to 3.9 mbpd.
Gasoline
- The EIA reported gasoline stocks rose by 479,000 barrels last week.
- US gasoline stocks are 17 million barrels below 5-year seasonal levels.
- US gasoline demand rose 182,000 bpd last week to 9.375 mbpd.
Propane
- Conway is trading at .5425 while Belvieu is trading at .5750.
- Conway is trading at 33% of crude.
- The US is exporting 54% of production as of 6/16/23.
- The EIA reported propane stocks rose by less than expected at 1.5 million barrels last week.
Natural Gas
- Overnight weather runs removed 5 CDDs the two-week forecast.
- Yesterday, US natural gas demand fell to 93.7 Bcf/d.
- The EIA reported a larger-than-expected injection of 95 Bcf for last week.
- Energy Executives expect a Henry Hub Natural Gas price of $2.97, according to the Dallas Fed Energy Survey.
Continuous Daily RBOB: The weakness in the complex has pushed the prompt gasoline contract below support at its 200-day moving average. For the week, the contract is approaching losses of nearly 20 cents. Look for $2.40 or the low on June 1st to lend support if the downside momentum continues.
