Crude oil prices started this week by moving slightly following after a week when they booked the sharpest drop in a month on interest rate woes. The week is set to be dominated by the start of driving season in the United States and the OPEC+ policy meeting on Sunday. The first will provide a glimpse into oil demand trends in the world’s biggest consumer while the second will likely confirm the production cuts that the extended oil cartel is expected to roll over into the second half of the year. For now, expectations are for a strong start to this year’s driving season. The American Automobile Association expects air travel over the long weekend to reach the highest in close to two decades. ANZ analysts were more cautious, pointing to EV sales as potentially undermining oil demand growth despite a strong driving season. “While U.S. holiday trips are expected to hit a post-COVID high, improved fuel efficiency and EVs could see oil demand remain soft,” the analysts said, as quoted by Reuters.“Based on current market expectations that OPEC+ is likely to extend cuts, oil’s risks are skewed to the upside,” one Chinese market analyst from Qisheng Futures Co. told Bloomberg. That expectation of extended production cuts by OPEC+ helped prices steady and may continue supporting them throughout the week—but not necessarily. “However, the trajectory of price action will be significantly influenced by the U.S. Producer Price Index (PPI) data scheduled for the week, which will in turn shape the Federal Reserve’s approach to potential rate adjustments,” Reuters quoted a Delhi-based SS WealthStreet analyst as saying. Meanwhile, Goldman Sachs made an upward revision to its long-term oil demand forecast, now seeing demand in 2030 at 108.5 million barrels daily, up from an earlier prediction of 106 million bpd. The bank expects demand for crude to peak in 2034 at 110 million bpd and plateau until 2040.
Some Sick Shit: US discourages EU from censuring Iran
The United States government is seeking to dissuade European Union countries from censuring Iran at the meeting of member states of the International Atomic Energy Agency (IAEA) to be held in June so that punitive measures do not take place before the US presidential elections in November. According to The Wall Street Journal on Monday, citing sources involved in the talks, the US opposes France and the United Kingdom’s initiative to slam Iran for allegedly advancing its nuclear plan and is influencing states not to approve the censuring of Iran in the IAEA and showing resistance to agree on further diplomatic steps against Tehran. NN: Lets talk about real genocide. Someday soon millions of innocent lives will be lost to an Iranian nuclear attack.
Hezbollah claims attack on Israeli military post
Hezbollah claimed responsibility for an attack on an Israeli military post situated in the central sector of the Lebanon-Israel border, according to Al Jazeera Arabic. The attack reportedly targeted and successfully hit technical systems at the Al Abad military post. This comes after multiple air-raid alerts were sounded across northern Israel on Sunday morning.
The Israeli military sounded sirens in Tel Aviv today, warning of potential rocket strikes, according to Al Jazeera. Qassam Brigades, Hamas’s armed wing, reportedly claimed responsibility for targeting the city, stating they did so in retaliation for what they termed “Zionist massacres against civilians.” Local media reported hearing fifteen explosions in the Tel Aviv area following the warning sirens. NN: Can you really envision a two state peace with these people?
Qassam Brigades attack Tel Aviv, prompting sirens
The Israeli military sounded sirens in Tel Aviv today, warning of potential rocket strikes, according to Al Jazeera. Qassam Brigades, Hamas’s armed wing, reportedly claimed responsibility for targeting the city, stating they did so in retaliation for what they termed “Zionist massacres against civilians. “Local media reported hearing fifteen explosions in the Tel Aviv area following the warning sirens. NN: Getting closer by the day. Hams is far from dead yet.
Oil Ends Week Near Three Month Lows
- WTI for July delivery rose 85 cents to settle at $77.72 a barrel in New York.
- Brent for July settlement gained 76 cents to settle at $82.12 a barrel.
- The prompt spread was 26 cents in backwardation, compared with 65 cents at the start of the month.
Oil hovered near the lowest in three months as traders weighed decreased geopolitical risks and signs that global markets are sufficiently supplied ahead of next month’s OPEC+ meeting. Global benchmark Brent crude’s prompt spread is at 26 cents, closely approaching a bearish contango structure that signals ample supplies in the near future. While both Brent and West Texas Intermediate futures settled higher Friday, they posted weekly declines of more than 2% and are near their lowest prices since February. Bearish sentiment has permeated the market after a “pricing out of the geopolitical premium and growing concern on the supply and demand balance,” said Arne Lohmann Rasmussen, head of research at A/S Global Risk Management. Traders will be seeking further visibility into fuel demand in the days ahead as the Memorial Day holiday weekend kicks off the start of the peak driving period in the US. Brent is still up about 7% up this year, in part due to OPEC+’s 2 million barrels a day of production cuts as well as persistent geopolitical risks. Still, oil has fallen since mid-April as the conflict in the Middle East has yet to disrupt crude supplies. The OPEC+ alliance meets on June 2, a day later than initially planned, and is widely expected to prolong output cuts into the second half of 2024. Its decision to hold the meeting online supports the expectation that cuts will continue, according to Viktor Katona, head crude analyst at market intelligence firm Kpler Ltd.
UNCONFIRMED REPORT: Houthis Bomb 3 ‘Israeli’ Ships In A Day
Houthis claim missile attacks on three ships (MSC Alexandria in the Arabian Sea, Yannis in the Red Sea, and Essex in the Mediterranean). The Essex manager denies the incident. U.S. Central Command confirms missile launches in the Red Sea. The attacks are part of a campaign against regional shipping, supporting Palestine, causing disruptions.
Nasdaq 100 closes at all-time-high
Major stock markets in the United States ended Friday’s session mostly higher with the Nasdaq 100 closing with a record value of 18,808.347. The Nasdaq 100 advanced by 0.99%, with Ross Stores Inc. skyrocketing 7.79%, Constellation Energy Corporation surging 4.28% and Qualcomm Inc. climbing 4.26%. Within the same index and after exceeding the $2.57 trillion of market capitalization following a remarkable earnings report for its first quarter, Nvidia Corporation closed the week gaining 14.82% compared to the previous one, showing investors enthusiasm. The S&P 500 gained 0.70%, as Deckers Outdoor soared 14.18%. The Dow Jones Industrial Average index closed flat. The euro was 0.31% higher against the dollar at 3:58 pm ET, to sell for $1.08431. NN: Like i have been telling you this market is not ready to short just yet.
Gasoline Prices Ahead of Memorial Day Are 1% Higher Than a Year Ago
- Gas prices are down slightly from recent highs but still above 2023’s Memorial Day prices.
- A record number of Americans plan road trips this summer, with many traveling long distances.
- AAA forecasts record-breaking travel numbers over the Memorial Day weekend despite mid-range gas prices.
The average retail price of a gallon of regular gasoline in the United States was $3.58 on the Monday before Memorial Day, which was 1% higher than last year’s pre-Memorial Day gas price, the U.S. Energy Information Administration (EIA) said on Thursday.
Over the past five weeks, Middle East tensions have eased, while U.S. refinery activity has increased after the end of seasonal maintenance, contributing to a 2% decline in average retail gasoline prices, the administration noted. A near-record number of Americans plan road trips this summer as gasoline prices continue to drop ahead of Memorial Day weekend, the start to summer travel, the 2024 Summer Travel Survey of fuel savings platform GasBuddy showed on Tuesday. A total of 76% of Americans plan to take at least one road trip between Memorial Day and Labor Day weekends, the GasBuddy survey showed. That’s 18% higher than last year. The average American traveler has two road trips planned, with many venturing far – 49% expect to drive 5 or more hours to reach their destination, according to the survey. GasBuddy expects the national average price of gasoline will hold in the mid-$3 per gallon range for much of the summer, with potentially tens of thousands of stations falling below $3 per gallon throughout the next several months. GasBuddy forecasts that gas prices will average $3.58 per gallon nationally between Memorial Day and Labor Day. AAA estimates showed last week that road trips during Memorial Day weekend are to set hit a record-high—38.4 million people are set to travel by car over Memorial Day weekend, the highest number for that holiday since AAA began tracking in 2000. AAA expects 43.8 million Americans to head 50 miles or more from home by all means of transportation over the Memorial Day holiday travel period between Thursday, May 23, and Monday, May 27, 2024. This would be the highest in nearly two decades, AAA said.
OPEC+ to Hold Key Policy Meeting Online
The OPEC+ alliance will hold its meeting in early June a day later than initially planned and via a video conference instead of in person, OPEC said on Friday. All meetings previously planned to take place in person in Vienna on June 1 will now be held online on June 2. The three key meetings that will be now held via video conference are the meeting of the Joint Ministerial Monitoring Committee (JMMC), the panel monitoring market developments and potentially recommending actions to the ministers to take, the meeting of the OPEC ministers, and finally, the meeting of the ministers of the wider OPEC+ coalition.
The meetings are “expected to be smooth,” delegates told Amena Bakr, Senior Research Analyst at Energy Intelligence, on Friday.
The fact that the OPEC+ meetings will be held online suggests that the producers in the pact have more or less reached an agreement about how to proceed with the current oil production cuts, analysts say.
OPEC+ is currently keeping around 2.2 million barrels per day (bpd) off the market in a deal expiring at the end of June. The alliance will decide at the meetings on June 2 whether to roll over all or part of the production cuts into the second half of the year. The OPEC+ group is likely to fully roll over the current cuts until the end of the year, analysts reckon, as oil prices are still rangebound, with Brent Crude stuck in the low $80s, after the slide in the past five weeks due to eased tensions in the Middle East. “Crude oil prices continue to drift lower, trading near a three-month low amid signs of demand weakness,” Saxo Bank said in a market commentary note early on Friday, adding that “a rollover of current production cuts remains the most likely outcome” of the OPEC+ meeting.
ICJ: Israel must ‘immediately’ halt any military ops in Rafah
The International Court of Justice (ICJ) ruled on Friday that Israel must “immediately” halt any military operations and any other actions in Rafah according to obligations under the Genocide Convention. The country was given one month to submit a report detailing all the measures it has taken to comply with the court’s latest order. President of the ICJ Nawaf Salam stressed that the humanitarian situation in Rafah has “deteriorated further” since March when the court issued an order. He went on to say that the humanitarian situation in the area can now be categorized as “disastrous.” “The court is not convinced that the evacuation efforts and the related measures that Israel affirms to have undertaken to enhance the security of civilians in the Gaza Strip and in particular those recently displaced from Rafah governorate are sufficient to alleviate the immense risk which the Palestinian population is exposed to as a result of the military offensive in Rafah,” he underlined further. NN: This will do nothing.