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Market Close: June 02 UP, Diesel UP $.0422, Gas UP $.0645

Fueling Strategy: Please keep your tanks topped today and tonight before 23:00 CST completely fill your tanks, Saturday prices will jump UP 6 cents then Sunday look for prices to continue UP 4 more cents ~Be Safe

NMEX Crude      $ 71.74 UP $1.6400

NYMEX ULSD     $2.3569 UP $0.0422

NYMEX Gas       $2.5007 UP $0.0645

NEWS

July WTI crude oil on Friday closed up +1.64 (+2.34%), and July RBOB gasoline  closed up +6.45 (+2.65%).

Crude oil and gasoline prices Friday closed moderately higher.   Crude prices rose Friday in hopes of stronger Chinese energy demand after Bloomberg reported the Chinese government is working on a new basket of measures to support the property market.  Also, the larger-than-expected increase in Friday’s U.S. May nonfarm payroll report shows strength in the labor market that is supportive of economic growth and energy demand.  Finally, fund short covering lifted crude prices ahead of this weekend’s OPEC+ meeting.

OPEC+ is meeting Saturday and Sunday to discuss crude production levels.   Goldman Sachs predicts the group will maintain crude output at current levels as “they want to observe the impact of fresh cuts in production, which just started this month.”

Russian Deputy Prime Minister Novak last Thursday said he doesn’t see any new steps from OPEC+, and the group will likely maintain current crude production levels when it meets this weekend.  Crude prices surged on April 3 after OPEC+ announced a surprise oil production cut of more than 1 million bpd starting May 1.  Saudi Arabia said the cuts were a “precautionary measure aimed at supporting the stability of the oil market.”  OPEC May crude production fell -500,00 bpd to a 16-month low of 28.26 million bpd.

Stronger-than-expected global economic news Friday was bullish for energy demand and crude prices.  U.S. May nonfarm payrolls rose +339,000, stronger than expectations of +195,000 and the largest increase in 4 months.  Also,  French Apr manufacturing production rose +0.7% m/m, stronger than expectations of +0.1% m/m.

On the negative side, India’s Apr crude imports fell -8.3% y/y to 19.8 MMT as processors curbed operating rates amid a drop in petroleum-product exports.  India is the world’s third-largest crude-consuming country in the world.

In a bullish factor, Vortexa reported Monday that the amount of crude stored on tankers that have been stationary for at least a week fell -0.5% w/w to 93.59 million bbl in the week ended May 26.

Crude oil prices are being undercut by signs that Russia has not delivered on its threat to cut crude output.  Tanker-tracking data from Bloomberg shows Russia’s crude exports in the four weeks to May 21 were more than 480,000 bpd higher than during the four weeks to February 26 to nearly 4 million bpd.  Crude shipments from Russian ports are +1.2 million bpd higher than at the end of 2022, with most of the crude going to India and China.  Russia has halted the publication of crude and condensate production data in an attempt to disguise if it has actually cut crude output.

Thursday’s EIA report showed that (1) U.S. crude oil inventories as of May 26 were -2.0% below the seasonal 5-year average, (2) gasoline inventories were -7.8% below the seasonal 5-year average, and (3) distillate inventories were -16.6% below the 5-year seasonal average.  U.S. crude oil production in the week ended May 26 fell -0.8% w/w to 12.1 million bpd, only 0.9 million bpd (-6.9%) below the Feb-2020 record-high of 13.1 million bpd.

Baker Hughes reported Friday that active U.S. oil rigs in the week ended June 2 fell by -15 to a 13-month low of 555 rigs, falling further 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.

Have a Great Day,

Loren R Bailey, President

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Cell: 479-790-5581

 

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Categories: Fuel News
loren: Fuel Manager Services Inc. "Serving the trucking industry since 1992" I've been in and around the trucking industry for 45-years beginning in owner operator operations at Willis Shaw Express. I bought a small trucking company that I ran for 6-years then sold and went to work for J.B. Hunt Transport in 1982. After 10-years with Hunt, I started Fuel Manager Services, Inc., we are in our 29th year of serving the American trucking companies. Our simple goal was and is to bridge the gap between the trucking companies and the fuel suppliers.