Looking to the Futures

Crude oil futures (/CLQ25) ended Friday’s session slightly higher as prices return to levels seen prior to the start of the most recent Iran/Israel conflict. 

In addition to geopolitical events, energy traders closely followed U.S. government reports highlighting U.S. oil supply and demand data for the past week. 

In its Weekly Petroleum Status Report, the Energy Information Administration (EIA) said crude oil stockpiles declined by 5.8 million barrels during the week ending June 20. This was above expectations for a 750,000 barrel draw.

U.S. oil production rose by 4,000 barrels last week and averaged 13.435 million barrels per day. This was 235,000 barrels above one year ago.

On the oil product side, distillate inventories declined by 4.1 million barrels, contrary to expectations for a 400,000 barrel build.  Distillate inventories are now 20% below the five-year average for this time of year.

Gasoline inventories fell by 2.1 million barrels, which was also contrary to forecasts for a 250,000 barrel build. These stockpiles are 3% below the five-year average.

EIA said gasoline production was flat from the previous week and averaged 10.1 million barrels per day. Distillate production fell last week, averaging 4.8 million barrels per day.

The agency also reported that U.S. ethanol production declined last week, averaging 1.081 million barrels per day. Expectations were for 1.09 million barrels per day.

Ethanol inventories increased to 24.4 million barrels last week. Traders were expecting inventories of 24.3 million barrels.

Digging further into the EIA report, refinery utilization rose by 1.5 percentage point to 94.7% last week. Expectations were for an increase to 94%. U.S. gasoline demand rose by 389,000 barrels per day to 9.688 million barrels per day. Distillate demand also rose last week, increasing by 48,000 barrels per day to 3.794 million barrels per day.

Oil inventories, excluding the Strategic Petroleum Reserve, stood at 415.1 million barrels, 11% below the five-year average.

Oil storage in Cushing, Oklahoma, the delivery point for the WTI Crude Oil futures (/CL) contract, fell by 500,000 barrels last week to 22.2 million barrels.

The U.S. crude oil rig count fell by one and now total 438 rigs during the week ending June 20. That’s down 9.7% from a year ago and the lowest oil rig count since October 2021, according to energy services firm Baker Hughes’ North American Rotary Rig Count report.

This morning, U.S. stock index futures moved higher in the early hours with the S&P 500® (+0.44%), the Nasdaq-100® (+0.62%), the Russell 2000® (+0.46%), and Dow Jones Industrial Average® (+0.54%) all in the green.

In Asia, major indexes closed mixed, with the Shanghai (+0.59%) and Nikkei (+0.84%) higher, but the Hang Seng (–0.87%) posting losses. 

European trading saw the DAX (–0.21%), the CAC (–0.01%), and the FTSE (–0.02%) markets move lower by midday.

Natural gas futures (/NGQ25) rallied on Friday (+6.04%) as short-covering buying to end the week propelled prices off of two-month lows made on Thursday. Natural gas prices have been on the defensive as weather forecasts are calling for more seasonal temperatures during the first half of July.  The National Weather Service Climate Prediction Center is forecasting near normal and above normal temperatures from July 3 to July 9 for all but the southwestern portions of the lower 48 states with well above temperatures centered in the Southeast and parts of Montana and Idaho. Below normal temperatures are seen over New Mexico and parts of Arizona, Texas, and Colorado during this time period. The U.S. Energy Information Administration (EIA) reported U.S. natural gas inventories rose by 96 billion cubic feet (Bcf) during the week ending June 20. This was above expectations for a build of 88 Bcf. U.S. gas inventories are currently 6.6% above the 5-year average, but –6.3% below last year. 

Corn futures (/ZCU25) closed higher on Friday (+1.86%), despite trading at a fresh contract low on Thursday, as traders covered positions ahead of this morning’s release of the USDA’s Quarterly Grain Stocks report. Average trade estimates for old-crop 2024-25 corn inventories is 4.65 billion bushels.

Gold futures (/GCQ25) ended Friday’s session at one-month lows (–1.80%) as geopolitical tensions begin to ease, which is reducing the need for a flight to safety trade that has helped support gold prices of late. In addition, a resurgent U.S. stock market has seen trader’s focus turn to equities and away from precious metals to end the week. 

Major economic reports, trading events, and news items that could potentially impact specific futures markets:

Chicago PMI for June (interest rate futures)

Dallas Fed Manufacturing Index for June (interest rate futures)

USDA Quarterly Grain Stocks (grain and cotton futures)

Futures First Notice Day: July grains and metals

Futures Last Trading Day: June Live Cattle, 2-year Notes, 5-year Notes, and Fed Funds, July Sugar, Heating Oil, Gasoline, and Brazilian Real

3-and 6-month T-bills 

Federal Reserve presidents Austan Goolsbee (Chicago) and Raphael Bostic (Atlanta) are scheduled to speak today.

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• 1 OZ Gold (/1OZ)
• Solana (/SOL)
• Micro Solana (/MSL)

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