Chinese Crude Imports: China's crude oil imports in May dropped to their lowest daily rate in four months due to extensive maintenance at both state-owned and independent refineries. The country imported 46.6 million metric tons, or 10.97 million barrels per day, down 3% from April and 0.78% from May 2024. Reduced imports were also influenced by high crude prices, lower contract volumes from Saudi Arabia, and a sharp decline in Iranian oil arrivals. Imports are expected to rebound in June with increased shipments from the Middle East and Brazil, while refined fuel and natural gas imports also declined amid weak demand and high prices.
India Fuel Demand: India's fuel demand rose to 21.32 million metric tons in May, its highest level in over a year, signaling strong economic and mobility-driven activity. Year-on-year, total fuel consumption increased by 1.1%, with notable growth in gasoline (up 9.2%) and diesel (up 2.1%), while naphtha demand declined due to petrochemical sector weakness. Sales of cooking gas also rose significantly by 10.4% annually, reflecting broader household and commercial usage. The rise in demand coincides with accelerated private sector activity in India, suggesting robust domestic consumption despite rising price pressures.
Oil Rig Count: The number of active oil rigs in the U.S. fell by 41 this week to 442, marking the sixth consecutive weekly decline and a drop of 50 rigs compared to a year ago, according to Baker Hughes. Meanwhile, Canada's oil rig count remained unchanged at 69, though this is 20 fewer than last year, while natural gas rigs in both countries rose slightly but remain down year-over-year. Despite the sharp drop in U.S. rigs, oil production remains strong, averaging 13.467 million barrels per day, just shy of the March record. This decline in rigs coincides with OPEC+ increasing output by 411,000 barrels per day for July, continuing efforts to unwind cuts made since November 2023.
Market Overview: Oil prices are holding steady on Monday as investors focused on U.S.-China trade talks in London, hoping for a deal that could boost global economic growth and oil demand. Optimism around a potential agreement had already driven prices higher the previous week. Weak Chinese economic data, including slowing exports and falling factory prices, added pressure but was largely offset by trade deal hopes. Additionally, China's crude oil imports fell in May amid refinery maintenance, while markets weighed the possible effects of higher OPEC+ output.
Daily ULSDHO
Diesel is continuing right where it left off last week starting this week moving stronger. The past two months have shown similar trends of strong starts to the month followed by some downward movement. We will see if June acts the same as April and May did. Currently diesel has moving higher past its 30 day moving average (orange) of $2.0878. Look for $2.21 to be a good test as a line of resistance with that being the highest value seen at the peak in May. Heating oil has tested $2.20 in April and May but was not able to stay above that level since March of this year.
Oil prices reached multi-week highs on Monday, supported by a weaker U.S. dollar and optimism around U.S.-China trade talks. West Texas Intermediate (WTI) crude rose to its highest level since April 4, as the dollar index fell 0.3%, making oil more affordable for foreign buyers. Investors focused on the potential fora trade deal between the U.S. and China, which could strengthen the global economy and increase demand for oil. Despite concerns from weak Chinese economic data, including slowed exports and reduced oil imports, hopes for trade progress kept market sentiment positive. Meanwhile, OPEC’s oil output rose slightly in May, though still below the group’s planned increase, as some member countries made modest production adjustments.
