Crude oil prices moved lower today after the U.S. Energy Information Administration reported an estimated inventory increase of 3.7 million barrels for the week to June 7. The change compared with a weekly build of 1.2 million barrels for the previous week that was also accompanied by builds in fuel inventories, pressuring benchmarks. Last week, the EIA estimated more builds in gasoline and middle distillate inventories. In gasoline, the authority reported an inventory build of 2.6 million barrels for the seven days to June 7, with production averaging 10.1 million barrels daily. This compared with an inventory build of 2.1 million barrels for the prior week, when production stood at an average 9.5 million barrels daily. In middle distillates, the EIA reported an estimated inventory increase of 900,000 barrels for the week to June 7, with production averaging 5 million barrels daily. This compared with an inventory increase of 3.2 million barrels for the previous week, when production averaged 5.1 million bpd. A day before the EIA reported its latest inventory moves, the American Petroleum Institute estimated a crude inventory decline of 2.43 million barrels for the week to June 7, pushing oil prices higher after a weak start to the week. The climb was also powered by two energy reports—by OPEC and by the EIA—which sounded an optimistic note on oil demand on Tuesday. In its latest Short-Term Energy Outlook, the EIA revised up its oil demand growth outlook from 900,000 bpd to 1.1 million bpd for this year. OPEC, meanwhile, maintained its forecast for demand growth of over 2 million barrels daily. “Despite announcing last week that it will start to phase out some of the voluntary cuts later this year, its forecasts suggest it should be easily accepted by the market,” ANZ analysts wrote in a note after the release of OPEC’s latest Monthly Oil Market Report, as quoted by Reuters.
Crude oil stockpiles in the United States rose by 3.7 million barrels to stand at 459.7 million barrels in the week ending June 7, the US Energy Information Administration shared in its report on Wednesday. The crude oil refinery inputs in the country averaged 17 million barrels per day, falling by 98,000 barrels per day from the average recorded in the week prior. Refineries operated at 95% of their capacity, while gasoline production rose to an average of 10.1 million barrels per day. Imports of crude oil into the US averaged 8.3 million barrels per day, 1.2 million barrels per day more in comparison to the previous week. Total commercial petroleum inventories surged by 11.5 million barrels.
The U.S. Energy Information Administration (EIA) released its June 2024 Short-Term Energy Outlook (STEO) today. The EIA expects U.S. crude oil production to average 13.2 million barrels per day (b/d) in 2024—an increase of 2% from 2023 levels. The EIA sees U.S. crude oil production averaging 13.7 million bpd in 2025.The increase in production will be led by the Permian, according to the EIA, and Eagle Ford This production outlook remains unchanged from the May version of the Short-Term Energy Outlook. Meanwhile, weekly U.S. crude oil production data published by the Energy Administration Information has held at an average of13.1 million barrels per day every week for the last twelve weeks.
For their global oil production outlook, the EIA sees OPEC+ largely adhering to its production targets announced earlier this month. While OPEC+ extended its production cuts, “our expectation is that OPEC+ crude oil production will follow these new targets until 2025. At that time, we expect that some OPEC+ producers will keep production below the targets in an effort to limit global oil inventory builds,” the EIA said in its report. While crude oil production forecasts have held steady, pricing forecasts have not. In terms of pricing, the EIA is now forecasting Brent crude oil prices to average $84 per barrel in 2024, up from an average of $82 per barrel in 2023 and $101 per barrel in 2022. The EIA’s previous report forecast 2024 Brent spot pricing at $88 For next year, the EIA held its Brent price forecast steady at $85 per barrel. For natural gas, the report anticipates Henry Hub natural gas spot prices to average $2.50 per million British thermal units (MMBtu) in 2024—steady on 2023 levels but up from the $2.20/MMBtu forecasted for 2024 last month, with the agency forecasting U.S. marketed natural gas production increasing by 2% next year. For 2025, the EIA anticipates $3.20/MMBtu for natural gas.
Brent crude oil and West Texas Intermediate (WTI) were both trading up over 2% on Monday as optimism strengthened over summer fuel demand prospects and despite the dwindling potential for the U.S. Federal Reserve to cut interest rates. On Monday at 12:06 p.m. EST, Brent crude oil was trading up 2.19% at $81.36, for a gain of $1.74 on the day, while the U.S. WTI benchmark was trading up 2.45% at $77.38, for a gain of $1.85 on the day. Monday saw the effects of a strong dollar rally late last week after the release of Friday’s U.S. jobs data, which some interpret as an indicator that we may be waiting longer for interest rate cuts from the Fed. Earlier in the day, Goldman Sachs had predicted that Brent would rise to $86 over the summer season on strong consumer demand, which in turn would lead to a significant supply deficit in the third-quarter of this year. “There is a growing conviction that demand will be buoyant as the summer driving season approaches leading to considerable stock draws,” he added. Tensions in Europe, including a falling euro, which suggest short-term instability with European Union elections, and the calling of French snap elections also appear to be providing some upwards momentum to oil prices.
OPEC: Oil demand growth forecast unchanged
The Organization of the Petroleum Exporting Countries (OPEC) estimated in its monthly report on Tuesday that the global oil demand will grow by 2.2 million barrels per day (bpd) in 2024, unchanged from the previous report. The growth will be driven by a rise in demand in China, India, the Middle East, and Latin America. OPEC said that total world oil demand is projected to reach 104.5 million bpd in 2024, “bolstered by strong demand for air travel and healthy road mobility, including trucking.” In 2025, the global oil demand should increase by 1.8 million bpd, same as in last month’s report.
The United States’ gross domestic product (GDP) is projected to grow by 2.2% this year and by 1.9%, unchanged from last month’s estimate. The Eurozone’s GDP was also left unchanged at 0.5% and 1.2% for 2024 and 2025 respectively. China is expected to see its economy grow by 4.8% this year, and 4.6% in 2025, matching the last forecast. Russia’s economic growth saw a positive revision, putting its GDP expansion at 2.9% for 2024, while the next year’s estimate remained at 1.4%. “Despite significant uncertainties remaining about the trajectory of key policy rate setting going forward, much will depend on the inflationary trend and the likely shift in focus by central banks, particularly in advanced economies, towards supporting economic growth,” OPEC underlined.
United States Secretary of State Antony Blinken said in a visit to Egypt on Monday that Hamas is the “only outlier” in ceasefire negotiations. He said the Palestinian group has shown “extraordinary cynicism” and urged regional leaders to “press” Hamas to accept the terms of the ceasefire deal. Blinken continued to insist that the “best way” to free the hostages held by Hamas and limit the number of civilian casualties is to agree to the proposed terms. He added that Egyptian negotiators spoke with representatives of Hamas “as recently as a few hours ago” but there has still been no breakthrough.
Hamas to kill hostages if ‘they think’ Israeli forces coming
Hamas leaders have ordered their fighters, who are holding hostages, to shoot the captives if they believe Israeli forces are approaching, The New York Times reported on Monday, citing Israeli officials. The report also mentions that a small group of hostages is believed to be being held near Hamas’ leader in Gaza, Yahya Sinwar, as a way to use the hostages as human shields, making it more difficult for Israel to target Sinwar. The article further notes that Hamas is expected to relocate more hostages into tunnels following the recent rescue operation conducted by the IDF on Saturday.
Senior Hamas official Sami Abu Zuhri called on the United States to exert pressure on Israel to halt its military campaign against the organization in Gaza, The Times of Israel reported on Monday. “We call upon the US administration to put pressure on the occupation to stop the war on Gaza and the Hamas movement is ready to deal positively with any initiative that secures an end to the war,” the media quoted Zuhri as saying. This plea from the representative was made prior to the scheduled visit of US Secretary of State Antony Blinken to the region, where he aims to advance negotiations for a ceasefire agreement. Blinken is expected in Egypt and Israel today.
Israeli Prime Minister Benjamin Netanyahu praised Israeli security forces for their mission to rescue four hostages in the central Gaza Strip on Saturday. He highlighted that Israel’s forces demonstrated the country’s refusal to surrender to “terrorism.” “We are committed to doing so in the future as well. We will not let up until we complete the mission and return all our hostages home – both the living and the dead,” Netanyahu stated, according to local media.
Gantz cancels speech after hostage rescue
Israeli Minister without Portfolio Benny Gantz scrapped his planned evening address as he was set to announce the withdrawal of his National Unity party from the coalition. This decision follows a military operation that led to the rescue of four hostages alive from the Gaza Strip.
At least 236 WERE reportedly killed in Israeli hostage op in Nuseirat
The death toll from the Israeli military operation in Nuseirat, aimed at rescuing four abductees, has reached 236, as reported by two hospital officials to CNN. Al-Awda Hospital director Marwan Abu Nasser mentioned 142 bodies arrived at the medical facility following Israel’s attack while Al-Aqsa Martyrs Hospital spokesperson Khalil al-Dikran reported 94 bodies. It is unclear how many of the dead are civilians or militants. The number of injured is reported at around 400. A witness of the attack told CNN that around “150 rockets fell in less than 10 minutes, while we were running away more fell on the market […] There are children torn apart and scattered in the streets, they wiped out Nuseirat, it is hell on earth,” he described. Nuseirat had recently been the center of Israeli military offensives as it destroyed a school run by the UNRWA.
The United States State Department announced on Friday that Secretary of State Antony Blinken will address the necessity of achieving a ceasefire agreement between Israel and Hamas during his upcoming visit to the Middle East and Europe. Blinken is expected to emphasize the importance of Hamas accepting Israel’s current proposal on a ceasefire “which is nearly identical to one Hamas endorsed last month,” with the proposed deal to “alleviate suffering in Gaza, enable a massive surge in humanitarian assistance,” and “allow Palestinians to return to their neighborhoods.” The secretary will visit France, Italy, Egypt, Jordan, Qatar, and Israel, where he is expected to meet with Israeli Prime Minister Benjamin Netanyahu.
syndicators made big purchases that are unraveling with high interest rates, adding distress to an already troubled US property market.
The collision of social-media fueled investing will wipe out millions f people. Wall Street’s securitization machine and sharply higher interest rates — also shows how FOMO and easy money once again combined to burst an American real estate bubble. Much of the worry over US commercial property has legitimately centered on the office market, where more than $38 billion in buildings were in distress as of March, compared with about $10 billion for apartments, according to MSCI. But multifamily buildings make up the biggest share of properties with potential distress — exceeding even offices — with more than $56 billion worth of real estate at risk of financial trouble, the firm’s data show. And unlike office buildings, largely backed by major financial institutions, much of the unraveling is centered on personal investors. Apartments were supposed to be an ironclad investment, protected on the downside by the basic hierarchy of human needs, with a potential for outsized returns as the country’s persistent housing shortage sends rents ever higher. But financial firms went hunting for ways to earn greater returns by taking bigger risks. Upstartlandlords like Western Wealth Capital specialized in speculative fix-and-flip deals, levering up with loans that were often then packaged as securities and sold to institutional buyers.
It’s an echo of the subprime mortgage boom that led to the 2008 financial crisis: a lending model built onpackaging seemingly safe loans for borrowers with short track records and small down payments. When interest rates started spiking two years ago, values tanked, creating worlds of trouble for landlords, debt funds and banks.
“When you’re at a casino, you know what you’re doing is gambling,” said Aleksey Chernobelskiy, whose firm, Centrio Capital Partners, runs a service helping retail investors salvage their investments in multifamily deals. “Here, people were gambling but they didn’t know it.”
An index tracking US multifamily property prices is down 18% from its peak
Source: MSCI
The troubles in commercial real estate are now only deepening as high interest rates persist and loans come due. Some big landlords are trying to stave off asset sales: Barry Sternlicht’s Starwood Real Estate Income Trust, a vehicle for personal investors, last month tightened limits on shareholders’ ability to pull money to preserve liquidity and hold off on having to unload property in a falling market.
Apartment owners such as Western Wealth, however, sometimes need to sell buildings at steep losses to pay debt or escape a cash crunch. Their turmoil is extending to the far corners of Wall Street, where the $80 billion market for commercial real estate collateralized loan obligations— the investment vehicles for the bundled loans — is facing unprecedented strain. Distress in CRE CLOs reached a record 8.6% in April, according to data provider CRED iQ, and creation of new CLOs is roughly 90% lower so far this year than in 2022.
In the fourth quarter of 2021, a record $166 billion worth of US apartment buildings changed hands, more than three times the pre-pandemic norm. Traditional players, from private equity giant Blackstone Inc. to insurer Guardian Life and Canadian pension fund Caisse de Dépôt et Placement du Québec, were leading the way. But for many apartments, the highest bids were coming from companies that virtually no one had heard of — firms known as real estate syndicators. They pool money from affluent individuals to buy properties, enabling investors to benefit from rising values and rents without having to deal with the headaches of renovations and financing. The apartment boom was a bonanza for the executives sharing in the profits and collecting fees from their limited partners, and for the nonbanks that kept deals flowing. The fastest-moving syndicators included Tides Equities, which has about $1.8 billion in CRE CLO exposure, according to Trepp. Other syndicators, including GVA Real Estate Group, Nitya Capital and Ashcroft Capital were garnering attention. Tides has more than $200 million in delinquencies in its CRE CLO debt, Trepp data show. Lenders have their hands full, too. Ready Capital Corp. saw the share of its loans that are at least 60 days delinquent rise to 13% in April, more than tripling from January. One of the major lenders to syndicators, Arbor Realty Trust Inc., has been targeted by short sellers including Viceroy Research. Tides didn’t respond to request for comment, while representatives for Ready and Arbor declined to comment. Six out of the seven borrowers with the most exposure to CRE CLO loans are apartment syndicators, according to an analysis by Trepp and Bloomberg News. Together, those firms have almost $4 billion in outstanding debt financed through the securities, with three-quarters of the volume composed of loans that are maturing this year. NN: We have been here before think tech wreck combined with 2008 mortgage collaspe. The Techclosure
U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve (SPR), increased by 1.2 million barrels from the week ending May 24 to the week ending May 31, according to the U.S. Energy Information Administration’s (EIA) latest weekly petroleum status report. The country’s crude oil stocks, not including the SPR, stood at 455.9 million barrels on May 31, 454.7 million barrels on May 24, and 459.2 million barrels on June 2, 2023. Crude oil in the SPR stood at 370.2 million barrels on May 31, 369.3 million barrels on May 24, and 353.6 million barrels on June 2, 2023, the report revealed. Total petroleum stocks in the U.S. – including crude oil, total motor gasoline, fuel ethanol, kerosene type jet fuel, distillate fuel oil, residual fuel oil, propane/propylene, and other oils – stood at 1.646 billion barrels on May 31, the report highlighted. This figure was up 14.4 million barrels week on week and up 37.5 million barrels year on year, the report showed.
“At 455.9 million barrels, U.S. crude oil inventories are about four percent below the five year average for this time of year,” the EIA noted in the report.
“Total motor gasoline inventories increased by 2.1 million barrels from last week and are about one percent below the five year average for this time of year. Finished gasoline inventories decreased, while blending components inventories increased last week,” it added. “Distillate fuel inventories increased by 3.2 million barrels last week and are about seven percent below the five year average for this time of year. Propane/propylene inventories increased by 2.5 million barrels from last week and are 14 percent above the five year average for this time of year,” the EIA continued. The EIA revealed in the report that U.S. crude oil refinery inputs averaged 17.1 million barrels per day during the week ending May 31, which it pointed out was 61,000 barrels per day more than the previous week’s average. “Refineries operated at 95.4 percent of their operable capacity last week,” the EIA stated in the report. “Gasoline production decreased last week, averaging 9.5 million barrels per day. Distillate fuel production increased last week, averaging 5.1 million barrels per day,” it added. U.S. crude oil imports averaged 7.1 million barrels per day last week, according to the EIA’s report, which revealed that this was an increase of 289,000 barrels per day from the previous week. “Over the past four weeks, crude oil imports averaged about 6.8 million barrels per day, 3.5 percent more than the same four-week period last year,” the EIA said. “Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 699,000 barrels per day, and distillate fuel imports averaged 142,000 barrels per day,” it added in the report. Total products supplied over the last four-week period averaged 20.0 million barrels a day, up by 1.3 percent from the same period last year, the EIA noted in the report.
“Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels a day, down by 1.0 percent from the same period last year,” it added. “Distillate fuel product supplied averaged 3.7 million barrels a day over the past four weeks, down by 3.4 percent from the same period last year. Jet fuel product supplied was up 13 percent compared with the same four-week period last year,” it continued. The price for West Texas Intermediate (WTI) crude oil was $78.96 per barrel on May 30, 2024, $0.48 more than a week ago, and $7.20 more than a year ago, the report stated. At the time of writing, the WTI price is trading under $75 per barrel. The report also stated that the national average retail price for regular gasoline declined to $3.516 per gallon on June 3, 2024, “$0.061 below last week’s price, and $0.025 less than the year-ago price”. The national average regular gasoline price as of June 6 is $3.487 per gallon, according to the AAA Gas Prices website. The week ago average was $3.569 per gallon and the year ago average was $3.545 per gallon, the site showed.
The price of crude oil for front-month deliveries increased on Thursday in the aftermath of the European Central Bank’s first rate cut in five years which appeared to alleviate some of the concerns about the bloc’s economic stability, seemingly pushing the commodity prices to rise. The labor market data coming from the United States showed an underwhelming figure for private-sector employment in the country, bolstering hopes that the Federal Reserve might follow its European counterparts during their two-day weekend next week. The upward movement of crude oil prices was further fueled by Russia’s reassurance that OPEC+ producers are committed to stabilizing the market.
West Texas Intermediate (WTI) for July contracts jumped 2.16% to sell at $75.65 per barrel at 11:59 am ET. Brent for August settlements climbed 2.03%, trading at $79.94 a barrel.
