Outlook: Energies are finding life today with crude and refined products all scratching out gains. Reports that Russia may further cut production to reaffirm compliance to OPEC+ and wildfires again threatening Canada’s crude production are providing support today. Geopolitical risk premium may also be inching its way back in with progress reports on a ceasefire deal largely absent this week after gaining steam again last week. The US dollar is off over 500 points this morning which also is supportive for dollar-based commodities. Gold futures have hit all-time highs today as they draft momentum from what looks to be a buy commodities day. The energy complex may find fresh direction from the EIA stats due to be released at 9:30 am CT. Industry estimates were mixed this week but the API’s big diesel build could halt momentum element if realized.
Crude
- Russia announced plans to make additional crude production cuts this year and next to make up for overproduction relative to OPEC+ quotas. (BBG)
- Canadian wildfires are less than 5 miles from Fort McMurray’s oil production site. (BBG)
- A Liberia-flagged oil tanker was struck by the Houthis in the Red Sea yesterday. (Reuters)
- Ceasefire chatter has been quiet this week allowing for risk premium to slip back in.
- Saudi Arabia’s crude exports rose 2.5% to 6.12 mbpd in May. (Reuters)
- Continuous WTI bounced off its 100-day moving average yesterday.
- Reuters estimates crude stocks fell 33,000 barrels last week.
- The API survey showed crude stocks fell by 4.4 million barrels last week.
- The EIA will report inventories at 9:30 am CT.
- As of 8:46 am CST: Brent crude oil up $0.95 to $84.68, US dollar index down $0.578 to 103.692 while the nearby e-mini S&P 500 futures contract is down 50.25 to 5668.00.
Diesel
- Reuters estimates diesel stocks fell 800,000 barrels last week.
- The API survey showed diesel stocks rose 4.9 million barrels last week.
- Diesel was unable to hold a close below its 50-day moving average yesterday despite a large build reported in the API survey late in the session.
Gasoline
- Reuters estimates gasoline stocks fell 1.6 million barrels last week.
- The API survey showed gasoline stocks rose 400,000 barrels last week.
Propane
- Conway is trading at .7575 while Belvieu is trading at .7925.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8150.
- Conway propane is trading at 40% to WTI.
- OPIS estimates propane stocks rose 3.6 million barrels last week.
Natural Gas
- Overnight weather runs added 1 CDDs for the two-week forecast.
- Freeport LNG will be operating at reduced rates as it restarts trains this week due to damage from Hurricane Beryl.
- Reuters estimates nat gas stocks rose between 12-30 Bcf last week.
Conway Propane: Propane values have pulled back since eclipsing 80c at the beginning of the month. Downside should be expected to be limited with crude resisting a breakout move lower.
