August WTI crude oil (CLQ23) is up +1.28 (+1.80%), and Aug RBOB gasoline (RBQ23) is up +0.0113 (+0.45%). Aug nat-gas prices (NGQ23) are up +0.053 (+2.13%).
Crude oil and gasoline prices are higher today on a weaker dollar and on some technical buying with Aug crude oil edging to a 1-1/2 week high. The oil market is shaking off bearish factors such as hawkish comments from Fed Chair Powell and a sell-off in stocks.
Oil prices continue to be undercut by concern about weaker Chinese energy demand. China's National Petroleum Corp (CNPC), China's largest oil and gas producer, on Tuesday cut its 2023 China crude oil demand forecast to +3.5% to 740 MMT from a March forecast of +5.1% to 756 MMT. In another sign of weak Chinese oil demand, analytics firm Kpler recently reported that China's crude oil stockpiles rose to a 2-year high in May of 966 million bbl, well above the five-year average of 858 million bbl.
Crude prices jumped earlier this month after OPEC+ on June 4 agreed to maintain its crude production levels. However, Saudi Arabia said it will voluntarily cut its crude output by 1 million bpd starting in July, and Saudi Energy Minister Price Abdulaziz bin Salman said he "will do whatever is necessary to bring stability to the oil market." He also said that next month's additional cuts could be extended, but they will keep the market "in suspense" about whether this will happen. OPEC May crude production fell -500,00 bpd to a 16-month low of 28.26 million bpd.
In a bearish factor, Vortexa reported Monday that the amount of crude stored on tankers that have been stationary for at least a week rose +5% w/w to 107.12 million bbl in the week ended June 16.
Last Wednesday's EIA report showed that (1) U.S. crude oil inventories as of June 9 were -0.6% below the seasonal 5-year average, (2) gasoline inventories were -7.1% below the seasonal 5-year average, and (3) distillate inventories were -14.5% below the 5-year seasonal average. U.S. crude oil production in the week ended June 9 was unchanged w/w at a 3-year high of 12.4 million bpd, only 0.7 million bpd (-5.3%) below the Feb-2020 record-high of 13.1 million bpd.
Baker Hughes reported last Friday that active U.S. oil rigs in the week ended June 16 fell by -4 to 552 rigs, a 13-1/2 month low. That is well below the 2-1/2 year high of 627 rigs posted on December 2. U.S. active oil rigs have more than tripled from the 17-year low of 172 rigs seen in Aug 2020, signaling an increase in U.S. crude oil production capacity.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
