Outlook: Last week’s rally in energies looks to be coming to a halt today. Prompt WTI has run into resistance at its 200-day moving average despite closing above $80 on Friday. Products are following lower this morning with RBOB holding the steepest losses. Hedge funds have become less bullish dropping their net long position to 6-month lows ahead of the driving season which officially kicks off next week. Headline risk was certainly presented over the weekend but as the dust settles, the market lacks concern. The death of Iran’s president could’ve posed a couple of risks for energy over the weekend, one being if it was a targeted attack, and the second being if the next in line would result in radical policy shifts. Neither of these is believed to be true at this point in time which has allowed price action to remain muted. Weekend fundamentals were mixed with a decline in floating storage and increases in Saudi crude exports.
Crude
- Iran’s President Ebrahim Raisi was killed in a helicopter crash on Sunday. The crash is believed to be accidental due to dense fog in the area.
- Bloomberg reported that an oil tanker heading for China was struck in the Red Sea by the Houthi.
- A drone strike was reported at another small independent refinery in Russia yesterday.
- Saudi Arabia’s crude exports hit a 9-month high of 6.4 mbpd in March.
- The DOE announced the purchased of 3.3 million barrels for the SPR to be delivered in October along with the intention to purchase another 3 million barrels.
- Global crude in floating storage fell 15% last week. (BBG)
- Continuous Daily WTI is finding resistance at its 200-day moving average of $80.08.
- Baker Hughes reported US oil rig counts rose by 1 to 497 last week.
- OPEC+ will meet on June 1st and is expected to leave output unchanged.
- As of 8:43 am CST: Brent crude oil down $0.49 to $83.47, US dollar index up $0.119 to 104.563 while the nearby e-mini S&P 500 futures contract is down 6.25 to 5333.00.
Diesel
- Another shot of rain in portions of group 3 has delayed planting progress. Terminals have remained well supplied and basis levels remain low.
- Nymex heating oil net length rose by 1.1k lots last week.
Gasoline
- Gasoline exports from China fell to their lowest level since 2015 last month as refiners wait for the next batch of export quotas. (BBG)
- Hedge funds cut their bullish gasoline bets by 4,579 net long positions to 44,298 last week which is a six-month low.
Propane
- Conway is trading at .6775 while Belvieu is trading at .6900.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7400.
- Conway propane is trading at 36% to WTI.
Natural Gas
- Overnight weather runs added 6 TDDs to the two-week forecast.
- Freeport LNG reported on Friday that all liquefaction units are now operating.
- Baker Hughes reported nat gas rigs remained flat last week at 103.
Continuous Daily WTI:
