Energy Futures Overperform – Fundamental Analytics

Conventional energy commodities saw an upward trend as shifts in fundamentals and geopolitical dynamics reshaped market perspectives.

Shale drilling momentum slows, WTI reaches 2-month high

WTI crude oil futures climbed to settle at $64.60 per barrel on Friday, marking their first weekly gain in three weeks with a rise of over 6.5%. The rebound was fueled by renewed optimism after trade talks between US-China, raising hopes for stronger global demand
EIA’s report for the week to 30 May shows refinery runs rising 670 kb/d while commercial crude inventories fell 4.3 mb—leaving stocks 7 % below their five-year average and underscoring a tight domestic balance
At its 1 June meeting, OPEC+ approved only another 411 kb/d step-up for July, a compromise that keeps most voluntary cuts in place and signalled continued supply discipline despite Saudi pressure for larger hikes
Shale activity cools further, as Baker Hughes counted 559 active U.S. rigs on 6 June (-4 w/w; -37 y/y), the lowest since November 2021—hinting at limited upside for near-term Lower-48 output growth

Storage saw strong buildup, futures fluctuate

US gasoline futures rose to $2.07 per gallon as the summer driving season gained momentum, with strong travel demand outweighing oversupply concerns
After a 2.4 mb draw left U.S. gasoline inventories at 223 mb (≈3 % below the 5-yr norm) for the week ending 23 May, a swift 5.2 mb rebuild to 228 mb the following week tempered upside, underscoring a still finely balanced market
One-week deliveries surged to 9.5 mb/d ahead of Memorial Day, yet the four-week average through 30 May was only 8.8 mb/d—3 % lower y/y—keeping the overall call on RBOB subdued
Trans-Atlantic arrivals remained robust, with total gasoline imports averaging 0.78–0.79 mb/d over the two-week span, roughly two-thirds destined for the East Coast, easing the region’s supply pinch
Refiners lifted crude runs by 670 kb/d to 17.0 mb/d (93.4 % utilisation) by end-May, but finished-gasoline output dipped as plants favoured distillate yields, capping incremental RBOB supply

Inventory increases surpass seasonal averages

US natural gas futures rose to above $3.75/MMBtu, heading for an 8% weekly gain, driven mainly by lower production
Dry output dipped to 105.8 Bcf/d in the Jun-4 EIA gas week, and Baker Hughes tallied only 114 active gas rigs on 6 Jun, the leanest early-summer fleet since 2021
Sequential injections of 101 Bcf (week to May 23) and 122 Bcf (to May 30) pushed inventories to 2.60 Tcf—now 5 % above the five-year average—muting upward price pressure
Warmer weather lifted power-sector burn to 34.6 Bcf/d (+10 % w/w) while residential/commercial use fell 23 %, leaving total U.S. consumption essentially flat
Gulf-coast maintenance cut pipeline deliveries to export plants to 14.4 Bcf/d (-7 % w/w); yet 25 cargoes still sailed, pointing to a brief export lull