Market Pulse
U.S. crude inventories fell 12.9 million barrels last week, including a 4.3 million barrel draw in commercial stocks and an 8.6 million barrel SPR release, driven by strong export demand that continues to tighten supplies. Commercial inventories remain near normal levels at 452.9 million barrels, though Cushing stocks are critically low as backwardation incentivizes exports.
Gasoline inventories dropped 4.1 million barrels on strong demand, high exports, and weak imports, supporting expectations for a mid-summer gasoline rally as the U.S. may need additional imports during peak driving season. Propane inventories rose 3.6 million barrels as demand softened, though exports remain supportive.
Crude prices held firm amid continued Strait of Hormuz disruptions, with Brent near $107.80/bbl and WTI near $102.50/bbl. Distillate inventories remain 9% below the five-year average, while total U.S. fuel demand is running modestly above last year’s levels.
Fundamentals
EIA’s Weekly Petroleum Inventory in MM’s BBLS
| Commodity | US Inventory | Change | 5 Yr Ave | CURRENT MARKETS |
|---|---|---|---|---|
| Crude Oil | 452.9 | -4.3 | 454 | WTI Crude: 0.98 |
| Gasoline | 215.7 | -4.1 | 227 | Heating Oil: -0.1022 |
| Distallates | 102.5 | 0.2 | 114 | RBOB: -0.0219 |
| Commodity | US Inventory | Change | Midwest Invent | Change |
|---|---|---|---|---|
| Propane | 81.1 | 3.6 | 17.3 | 1.1 |
Propane
Propane prices closed higher for the third consecutive day on Tuesday, supported by continued strength in crude oil markets. Despite softer seasonal heating demand, propane prices have maintained upward momentum amid record export activity. Strong demand from East Asia has prompted Conway sellers to direct a significant volume of barrels into the export market, supporting prices despite declining domestic consumption.
The North-to-South spread remains wide at negative 12.25 cents, while propane’s value relative to crude oil continues to trade at historically low levels, currently near 33% at Conway and 38.5% at Mt. Belvieu.
Trump/Xi Meeting
The upcoming summit between President Donald Trump and Chinese President Xi Jinping is expected to focus primarily on stabilizing economic and geopolitical tensions between the United States and China. Trade and tariffs are likely to dominate discussions, with both sides reportedly exploring selective tariff reductions and expanded Chinese purchases of U.S. goods, including agriculture and energy products. Markets are also closely watching for developments surrounding semiconductor export restrictions, artificial intelligence policy, and rare-earth supply agreements, all of which remain central to the growing competition between the two nations.
Taiwan is expected to remain the most sensitive geopolitical issue, as China continues pressuring the U.S. to scale back support for the island while Washington seeks to maintain deterrence without escalating tensions. The summit also carries important implications for global energy markets, particularly regarding stability in the Strait of Hormuz, one of the world’s most critical oil shipping routes. Both the United States and China have strong economic incentives to avoid further disruptions in the region, as heightened conflict involving Iran could threaten global crude and LPG flows, increase shipping risks, and drive energy prices higher. China, as a major importer of Middle Eastern crude, and the U.S., as a key player in global energy markets, are both expected to prioritize maintaining stability in the region. While expectations for a major breakthrough remain limited, the summit is widely viewed as an effort toward “tactical stabilization,” aimed at reducing volatility, maintaining open communication, and preventing further deterioration in relations between the world’s two largest economies.
Funny
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