Due to the Juneteenth holiday, energy markets will halt early at 1:30 pm CT and resume trade at 5:00 pm CT. Our desk will be staffed for the entirety of the day.
Outlook: Brent and WTI crude futures are flat this morning with product futures trading higher. Energies continue to receive support from global geopolitical risks and remain near their seven-week highs. Sources citing the API reported a decent-sized crude build, which is helping cap prices. Official EIA data will be reported tomorrow at 10 am CT. The stochastic oscillator, a momentum technical indicator that generates overbought and oversold signals, is signaling WTI crude is the most overbought since September of last year. Trends can remain in overbought and oversold conditions for an extended period, but commodities being extremely overbought or oversold can oftentimes indicate a trend reversal. Expect light trading today due to the holiday and anticipation of the EIA data tomorrow to determine if demand increased. According to an OPIS market poll, the EIA is expected to report a build of 2.26 million barrels for the week ended last Friday, with estimates ranging from builds of 1.75 million to 2.75 million barrels.
Crude
- Sources citing the API said U.S. crude stocks rose by 2.264 million barrels, well above the Reuters poll of analysts that reported a draw of 2.2 million barrels.
- Iran plans to increase its crude oil output from 3.6 million bpd to 4 million bpd, despite U.S. sanctions. (Reuters)
- Chinese refinery output declined 1.8% year-over-year in May to 14.25 million bpd, due to lower maintenance overhauls and lower margins. (oilprice.com)
- Canada is developing regulations to force the oil and gas industry to cut emissions to 137 million metric tons, 37% below 2022 levels, by 2030. Analysts believe this will prompt companies to cut production rather than invest in costly carbon capture and storage technology. (Reuters)
- Since Russia invaded Ukraine, the European Union has slashed Russian imports by over 80% from 3.3 million bpd to 600,000 bpd. China increased imports by 40% from 1.6 million bpd to 2.3 million bpd, while India saw the largest increase from 100,000 bpd to 1.9 million bpd. (Zerohedge.com)
- Singapore is offering refineries and petrochemical companies rebates of up to 76% for its planned carbon tax for 2024 and 2025 to help them ease cost stress and remain competitive versus other countries. Singapore’s new taxation rate for carbon emissions took effect on January 1, and any business that emits more than 25,000 metric tons of carbon annually must pay $25 per ton until 2025. (Reuters)
- As of 8:35 am CST: Brent crude oil up $0.09 to $85.42, US dollar index down $0.036 to 104.840 while the nearby e-mini S&P 500 futures contract is up 5.25 at 5496.25.
Diesel
- Sources citing the API said distillate inventories rose by 538,000 barrels, slightly higher than the Reuters poll of analysts that reported a draw of 264,000 barrels.
- Distillate demand is trailing the five-year average but is ahead of last year by 2%.
- The heat crack has increased over $3 since bottoming out in early June.
Gasoline
- Sources citing the API said U.S. gasoline stocks fell by 1.077 million barrels, well below the Reuters poll of analysts that reported a build of 1.533 million barrels.
- Although gasoline demand is above the five-year average, it is still training last year by 2%. May.
- U.S. gasoline cracks at $23 are well above other major hubs as Europe is around $10, and Singapore is around $5. Refineries have cut back in Asia due to weak gasoline demand. (oilprice.com)
- While U.S. gasoline stocks are among the highest globally, the high U.S. refinery utilization rates create downside for gasoline, especially considering gasoline stocks are the highest seasonally since 2021. (oilprice.com)
Propane
- Conway is trading at .7550 while Belvieu is trading at .7850.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7975.
- Conway propane is trading at 39% to WTI.
Natural Gas
- Russia overtook the U.S. to become the largest natural gas supplier to Europe again, accounting for 14% of Europe’s May imports. (oilprice.com)
- Money managers are as bullish as they have been on natural gas prices since January 2022 as there is concern about Europe’s gas supply in the near term.
- The European Union’s gas supply is 74% full as of June 17. (Gas Infrastructure Europe)
