Outlook: The energy complex is kicking the week off showing strength with crude, gas, and diesel all in the green. The move higher this morning remains marginal and within the market's comfort zone that it has traded in for the majority of the last two months. Headlines over the weekend and into this morning have leaned relatively bearish but not enough to waiver short-term momentum. Chinese economic data continues to reflect sluggish recovery and the prospect of substantial demand growth feels like it grows less likely with each monthly reporting window. Poor margins have pushed Chinese refiners to yearly lows for refinery throughput to reinforce lackluster demand. In the US, the White House reiterated that it is willing to release barrels from the SPR again if prices surge. While it is difficult to estimate the scale at which these releases would happen, if they happen, it should be noted as a card in hand to suppress any major bullish developments. Unrest in the Middle East and the war between Russia and Ukraine still linger in the background for upside risk despite the market growing desensitized.
Crude
- Chinese oil refining slowed to its slowest rate this year last month at 14.31 mbpd, according to Bloomberg calculations.
- Chinese economic data released last night is being viewed as relatively bearish in terms of economic recovery.
- White House energy adviser Amos Hochstein said in an interview with Financial Times that the White House will release barrels from the SPR again if necessary this year.
- Global crude in floating storage fell 12% last week, according to Vortexa data. (BBG)
- Several tropical disturbances have developed in the Gulf but neither are expected to make landfall in key energy infrastructure areas.
- Baker Hughes reported US oil rigs fell by 4 to 488 last week.
- As of 9:07 am CST: Brent crude oil up $0.63 to $83.25, US dollar index up $0.004 to 105.554 while the nearby e-mini S&P 500 futures contract is down 4.25 to 5432.00.
Diesel
- India’s diesel sales remained steady, up 0.1% in the first 16 days of June. (BBG)
- The prompt diesel rack rose over $2 last week.
- Nymex heating oil net length fell by 4.6k lots last week.
Gasoline
- India’s gasoline sales fell 3.6% m/m for the first 16 days of June. (BBG)
- The prompt RBOB crack fell nearly $2.50 last week.
- Nymex RBOB net length rose by 286 lots last week.
Propane
- Conway is trading at .7525 while Belvieu is trading at .7900.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8100.
- Conway propane is trading at 41% to WTI.
- Prompt Conway rose around 5 cents last week.
Natural Gas
- Overnight weather runs removed 13 CDDs for the two-week forecast.
- The second half of June is still expected to be hotter than the 10-year average.
- Baker Hughes reported nat gas rigs were unchanged last week at 98.
Continuous Daily HO: After a failed test on Friday, prompt diesel futures are retesting the 50-day moving average today. A close above would be considered a bullish technical development.
