Recap: Trading in oil futures was volatile, with prices opening the session trading to the downside, only to finish the session close to unchanged. Investors are navigating a host of factors influencing prices, including reports of large production cuts in Libya amid political strife, a potential visit to Saudi Arabia by President Biden and a US stock market that's sinking into bear market territory after consumer inflation hit a 40-year-high. Despite crude-oil's small gains today, the futures markets for RBOB gasoline and ULSD diesel both saw sharp declines, a suggestion perhaps that tight fuel supplies are starting to loosen as the economy cools. July WTI gained 26 cents per barrel, or 0.22%, to settle at $120.93. Brent crude for August delivery gained 26 cents per barrel, or 0.21% to $122.27. Petroleum products slipped, with July RBOB losing 13.69 cents, or 3.28% to $4.0353 a gallon, while July heating oil lost 8.33 cents, or 1.91%, to $4.2834 per gallon.
Technical Analysis: July WTI pulled back, dipping below $118.85, the 10-day moving average only to find buyers waiting down below. This spot contract remains within the ascending channel as it keeps trying to break above the upper trend line. At some point, we do expect a valid breakout and for this market to gain momentum to the upside. Resistance is set at $23.12 and above that at $130.50. Support is seen at $118.90 and below that at $110.00.
Fundamental News: The price of U.S. gasoline averaged more than $5/gallon for the first time on Saturday. According to the AAA, the national average price for regular unleaded gasoline increased to $5.004/gallon on June 11th from $4.986/barrel a day earlier.
IIR Energy reported that U.S. oil refiners are expected to shut in 370,000 bpd of capacity in the week ending June 17th, unchanged from the previous week. Offline capacity is expected to decline to 191,000 bpd in the week ending June 24th.
Colonial Pipeline Co is allocating space for Cycle 35 shipments on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina.
The managing director of India’s ONGC Videsh, Alok Gupta, said operations at Russia’s Sakhalin 1 oil project will continue to face disruptions for a couple of months as Western sanctions have impacted insurance cover for ships to transport crude. He hopes that the situation at Sakhalin-1 would normalize over the “next two-three weeks as we are finding out alternative measures.”
The Ukrainian government has approved moves to suspend exports of Ukrainian gas, coal and fuel oil because of Russia's invasion.
India's oil imports in May totaled 4.98 million bpd, the highest since December 2020, as state refiners increase output to meet higher local demand while private refiners turned focus to gain from exports. Imports in May were up 5.6% on the month and about 19% on the year, when imports declined as second deadly wave of COVID-19 cut fuel demand. During May, India's import of Russian oil increased to a record high, with Moscow replacing Saudi Arabia as second biggest oil supplier to India. In May Indian refiners received about 819,000 bpd of Russian oil, the highest so far in any month, compared with about 277,000 bpd in April.
Early Market Call – as of 8:15 AM EDT
WTI – July $122.51, up $1.57
RBOB – July $4.1114, up 7.5 cents
HO – July $4.3560, up 7.12 cents
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