Market Report & Analysis for 6/20/2019 Morning Edition

by | Jun 20, 2019 | EMI, Fuels & Markets, FutureRack, Industry News

Morning Market Overview

Oil Futures Ease on Bearish API ahead of EIA, Fed Decision CRANBURY, N.J. (DTN)

New York Mercantile Exchange nearest delivered oil futures and Brent on the Intercontinental Exchange eased in early trading following Tuesday’s advance, pressured by bearish weekly U.S. supply statistics released late Tuesday that offset renewed optimism for a U.S.- China trade deal. At 9 AM ET, NYMEX July West Texas Intermediate futures were down about $0.20 at $53.70 bbl ahead of expiration Thursday afternoon, with the August contract holding a $0.20 premium to the expiring contract. NYMEX July RBOB futures were down 1.4cts near $1.7075 gallon, with the July ULSD contract 0.6cts lower near $1.8220 gallon.

The American Petroleum Institute reported an 812,000 bbl draw in U.S. commercial crude stocks for the week-ended June 14 that was half of market expectations, and a gasoline build of 1.458 million bbl that was more than double estimates. Data was supportive for distillate stocks that dipped 50,000 bbl against expectations for a 1 million bbl gain.

The Energy Information Administration releases its weekly data set at 10:30 AM ET. After extended negotiating, the Organization of the Petroleum Exporting Countries, Russia and nine additional non-OPEC oil producing countries have agreed to meet on July 1 and 2, delaying their previously scheduled meeting that was set for June 25-26.

OPEC and Russia wanted to push the date beyond the June 28-29 G20 Summit to better gauge U.S.-China trade talks. OPEC+ are widely expected to rollover 1.2 million bpd in collective production cuts, with Saudi Arabia reportedly said to push other members to live by their quota. The Saudis have cut output well below their 10.311 million bpd allotment, with May output at a 9.69 million bpd five-year low.

The kingdom reportedly will produce less this month. Markets cheered news that U.S. President Donald Trump and Chinese President Xi Jinping have agreed to meet at the G20 Summit in Osaka, Japan, with Trump announcing in Twitter Tuesday that their respective negotiating teams will meet in advance to prepare for the dialogue. The announced meeting follows a brief breakdown in talks, heightening concern over an escalation in the trade dispute many suggest would slow global economic growth and demand for oil.

The U.S. dollar is weaker this morning, holding below May’s two-year high as the Federal Open Market Committee prepares for the second day of discussion on monetary policy. Federal Chairman Jerome Powell is expected to strongly signal that the central bank will cut the federal funds rate at its July 30-31 meeting.

During a panel discussion Tuesday, European Central Bank President Mario Draghi telegraphed the likelihood that the ECB would roll out monetary stimulus, which could be announced as soon as during their July meeting. Europe’s economy has struggled to grow.