Written on: June 1, 2023

Energy Price Report

Thursday, June 1, 2023

Energy futures looked set to extend their slide to a third consecutive session on Thursday, with bearish weekly US stock data from the American Petroleum Institute (API) likely weighing on the price action, whereas flat-to-higher trade in equities and weakness in the US dollar index following passage of the debt ceiling bill in the House and a large set of mostly supportive economic data releases were likely helping keep a floor on the price action.  Market participants are looking ahead to US economic data releases and to the more closely watched inventory report from the Energy Information Administration (EIA) for further direction.

API Reports

US inventory data from the API released yesterday were bearish with a 1.39mb draw, API reported a 5.20mb build in crude stocks. The Institute reported a larger than expected build of 1.80mb in distillate stocks and a surprise 1.90mb build in gasoline inventories. Analysts were looking for a 0.68mb build in distillates and a 0.70mb draw from gasoline stockpiles. Refinery utilization is expected to have risen by 0.7 percentage points during the reporting week.

Asian Market

The Chinese manufacturing sector saw a surprise return to growth last month per a rise in the Caixin/S&P Global Manufacturing PMI to 50.9 from 49.5 in April. Growth in the Indian manufacturing sector accelerated last month, with a rise from 57.2 to 58.7 in the Nikkei/S&P Global Manufacturing PMI. The Nikkei gained 0.84% last night, while the Shanghai Composite was unchanged and the Hang Seng slipped 0.10% lower.

European Market

There was a large set of European economic data released this morning. The UK Nationwide House Price Index saw a smaller than expected dip of 0.1% last month and CIPS/S&P Global Manufacturing PMI beat expectations at 46.9 by coming in at 47.1. German retail sales growth of 0.8% in April missed expectations, but this was largely due to base effects from a sharp upward revision to March data. The final Germany S&P Global Manufacturing PMI for May saw a surprise upward revision to 43.2, but the index for France saw a surprise downward revision to 45.7. The index for the Eurozone as a whole saw an unexpected upward revision to 44.8. Also encouraging, the flash HICP for May indicates Eurozone inflation slowed more than expected last month, to 6.1% year-on-year. The German DAX had strengthened by 1.0%, the French CAC 40 had gained 0.5%, and the FTSE 100 in the UK was up by 0.4% as of this writing. Meanwhile, Dow futures were down by 0.1%, S&P 500 futures were up by 0.2%, and Nasdaq futures had added 0.1%. The US dollar index was down by 0.2%, which is supportive for crude.

Crude & Refined Products

Crude oil and refined products futures saw across-the-board losses for a second session yesterday, ahead of a vote by the House on suspending the US debt ceiling, despite mostly supportive economic data releases. Brent crude fell by 88 cents to close at $72.66 a barrel, WTI crude settled $1.37 weaker at $68.09 a barrel, gasoline futures ended the day at $2.5599 per gallon, heating oil futures settled at $2.2596 per gallon and natural gas futures fell by 6.1 cents to settle at $2.266 per MMBTU.