Outlook: The energy complex is lacking direction in mixed trade this morning which has been a common theme for the week. Yesterday afternoon the API released its inventory survey which leaned bearish showing a contrasting build for crude against other industry estimates along with a significant build in gasoline supplies. The API has not aligned well with industry estimates over the last several weeks which may be leaving traders cautious on how they interpret the data ahead of the EIA report. If the EIA follows the API’s track, markets may face selling pressure, especially if gasoline stocks rise and demand looks soft which would be counter-seasonal. The US dollar is making a strong move higher this morning and looks to be slowly pressuring energies as they slide from green to red mid-morning. Macroeconomic reports will pick up starting tomorrow and should provide fresh insight with the most anticipated report being the PCE data on Friday.
Crude
- Energy markets are trying to shrug off a bearish API print along with a higher US dollar this morning.
- US crude imports in May rose to a two-year high of 3.1 mbpd, supported by an increase in Canadian imports via the new TMS pipeline.
- Reuters estimates crude stocks fell 2.9 million barrels last week.
- The API survey showed crude stocks rose 900,000 barrels last week.
- The EIA will report inventories today at 9:30 am CT.
- US Personal Consumption Expenditures Index, which is the Fed’s preferred measure of inflation, will be reported on Friday this week.
- As of 8:45 am CST: Brent crude oil down $0.16 to $84.85, US dollar index up $0.498 to 106.105 while the nearby e-mini S&P 500 futures contract is down 13.25 to 5523.00.
Diesel
- China’s May gasoline exports more than doubled April levels.
- Reuters estimates diesel stocks fell 300,000 barrels last week.
- The API survey showed diesel stocks fell by 1.2 million barrels last week.
- LTD for July HO is 6/28, please be out of positions by EOD 6/27.
Gasoline
- China’s May diesel exports rose by 42% m/m.
- Reuters estimates gasoline stocks fell 1.0 million barrels last week.
- The API survey showed gasoline stocks rose 3.8 million barrels last week.
- LTD for July RBOB is 6/28, please be out of positions by EOD 6/27.
Propane
- Conway is trading at .7575 while Belvieu is trading at .7900.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8150.
- Conway propane is trading at 39% to WTI.
- OPIS estimates propane stocks rose 1.86 million barrels last week.
Natural Gas
- Overnight weather runs removed 4 CDDs for the two-week forecast.
- Today is LTD for July natural gas futures.
- Temperatures for the beginning of July are expected to be warmer than the 10-year average.
- Reuters estimates nat gas stocks rose between 32 and 55 Bcf
Continuous Daily WTI: The continuous crude chart is reflecting a death-cross today represented by the 50-day moving average crossing below the 200-day moving average. This is a bearish technical indication and could contribute to downside pressure.
