Outlook: For the third consecutive day the energy complex is starting the morning mixed with crude and gas edging higher while diesel lags lower. Macro fears are proving heavy this week, preventing any upside momentum from developing. The growing contango in global crude benchmarks has signaled oversupply which is contradictory to fundamental expectations moving forward. SPR releases coming to an end and a fresh Saudi output cut for July should help the market tighten. China remains a significant question mark with further contraction in the manufacturing sector expected for the last month. The PMI report will be released Thursday night and could create volatility if the print varies from expectations. The EIA will release inventories this morning which could help the market find its footing.
Crude
- WTI and Brent spread curves are seeing contangoes expand as a signal of oversupply.
- US consumer confidence rose in June to the highest level in 1.5 years.
- Chinese manufacturing and non-manufacturing PMI will be reported Thursday night.
- Reuters estimates crude stocks fell by 1.8 million barrels last week.
- An industry survey yesterday afternoon showed crude stocks fell by 2.4 million barrels last week, according to sources citing the API.
- The US SPR fell by 1.47 million barrels last week.
- The EIA will report inventories today at 9:30am CT.
- As of 8:25 am CST: Brent crude oil up $0.10 to $72.36, US dollar index up $0.450 to 102.942 while the nearby e-mini S&P 500 futures contract is down 11.25 to 4407.00.
Diesel
- Reuters estimates diesel stocks rose by 800,000 barrels last week.
- An industry survey yesterday afternoon showed diesel stocks rose by 777,000 barrels last week, according to sources citing the API.
Gasoline
- Reuters estimates gasoline stocks fell by 100,000 barrels last week.
- An industry survey yesterday afternoon showed gasoline stocks fell by 2.85 million barrels last week, according to sources citing the API.
Propane
- Conway is trading at .5300 while Belvieu is trading at .5525.
- Conway is trading at 33% of crude.
- The US is exporting 54% of production as of 6/16/23.
- OPIS estimates propane stocks rose by 2.45 mb last week.
Natural Gas
- Overnight weather runs added 1 CDDs to the two-week forecast.
- Yesterday, US natural gas demand rose to 97.5 Bcf/d.
- US gas production is expected to average 100.8 over the next 2 weeks.
- The National Weather Service is forecasting higher-than-expected temperatures over the next 10 days for Louisiana, Mississippi, and Florida to extend the heat wave moving across the south.
India’s Oil Imports: Russian supplies accounted for 46% of India’s oil imports last month which compares to just 2% pre-war, according to Kpler data. India has been purchasing Russian crude at around a $7-$8 discount to the Brent benchmark. Russian Urals last month were sold at around $52, which is below the $60 price cap set by the EU and G7.
