WTI crude futures rose above $81 per barrel on Wednesday, recouping some losses from the previous session even after industry data pointed to a surprise increase in US crude stockpiles which raised worries about softening demand in the world’s top oil consumer. API data showed that US crude inventories rose by 0.914 million barrels last week, defying market expectations for a 3 million barrel draw. US gasoline stocks also jumped by 3.84 million barrels, compared with forecasts for a 1 million barrel decline. Official data from the US EIA will follow later on Wednesday. Moreover, investors remained cautious ahead of US PCE inflation data this week that could shed light on the path for Federal Reserve interest rate cuts. Meanwhile, oil prices traded close to two-month highs amid heightened geopolitical risks driven by Ukrainian drone attacks on Russian oil infrastructure and failure to secure a peace deal between Israel and Hamas.
US natural gas futures traded around $2.8/MMBtu due to forecasts of hotter weather and increased cooling demand. Meteorologists predict temperatures across the Lower 48 states will stay above normal through at least July 9, which boost the use of gas-powered generators to run air conditioners. Current gas flows to the seven major U.S. LNG export plants remain steady at 12.9 bcfd in June, matching May's figures but below the record 14.7 bcfd set in December 2023. This reduction is due to ongoing maintenance at several Louisiana facilities, including Cameron LNG, Cheniere Energy's Sabine Pass, and Venture Global's Calcasieu Pass. So far this year, gas production is down by around 7% due to delayed well completions and reduced drilling by companies like EQT and Chesapeake after prices fell to 3.5-year lows earlier in the year.
Gasoline futures in the US were near the $2.5 per gallon mark in June, hovering close to their highest level in over three weeks amid fresh evidence of lower supply and ample demand. Data from the EIA showed that the United States drew 2.3 million barrels of gasoline in the week ending June 14th, surprising market expectations of a 1.1 million barrel build, and more than twice of an earlier industry report that pointed to a 1.1 million barrel drop. Additionally, the EIA report showed that product supplied, a widely used demand gauge in the United States, rose by 346 thousand barrels to 9.386 million in the period. In the meantime, persistent military pressure in Gaza by Israeli forces maintained the geopolitical risk on global energy supply, lifting fuel prices.
US heating oil futures traded above $2.53 per gallon in June, an eight-week high, after new data pointed to reduced supplies. The latest EIA report showed that distillate fuel stocks in the United States fell by 1.726 million barrels on the week ending June 14th, well below the expected 1 million barrel increase, while crude oil stocks fell by 25% more than the anticipated 2 million barrel draw. This supply reduction magnified concerns of lower energy availability amid geopolitical tensions in Eastern Europe and the Middle East. However, the report also showed a reversal in the previous week’s drawdown for heating oil stockpiles, rising by 526 thousand barrels in the period, which tempered the rise in heating oil prices.
