Looking to the Futures

Crude oil futures (/CL) gave back all of Thursday’s gains on Friday, with the lead-month August contract falling to levels last seen in late February.

The decline came as shipping traffic through the Strait of Hormuz reached its highest levels since the start of the war with Iran, easing concerns about potential supply disruptions and helping push Brent crude oil down more than 27% and WTI crude oil down more than 25% over the past month.

In its Weekly Petroleum Status Report, the Energy Information Administration (EIA) said crude oil stockpiles declined by 6.1-million barrels during the week ending June 19. This was above expectations for a 4.5-million barrel storage draw.

Oil inventories, excluding the Strategic Petroleum Reserve, stood at 412.1 million barrels, 7% below the five-year average.

U.S. oil production rose by 13,000 barrels per day last week, averaging 13.819 million barrels per day. This was 384,000 barrels per day higher than one year ago.

On the oil product side, distillate inventories increased by 3.11-million barrels, which was contrary to expectations for a 500,000 barrel draw. Distillate inventories are now 10% below the five-year average for this time of year.

Gasoline inventories increased by 2.1-million barrels, which was also contrary to expectations for a 600,000 barrel draw. These stockpiles are now 5% below the five-year average.

EIA said gasoline production decreased from the previous week and averaged 9.5-million barrels per day. Distillate production increased slightly last week, averaging 5.2-million barrels per day.

The agency also reported that U.S. ethanol production declined last week, averaging 1.090 million barrels per day. Expectations were for a decline to 1.1 million barrels per day.

U.S. ethanol inventories rose slightly to 24.6 million barrels last week. Traders were expecting inventories of 24.4 million barrels.

Digging further into the EIA report, refinery utilization fell by 0.6 percentage points to 96.1% last week. Expectations were for a decline to 95.9%. U.S. gasoline demand declined by 437,000 barrels per day to 8.775 million barrels per day. Distillate demand also fell last week, declining by 126,000 barrels per day to 3.533 million barrels per day.

Oil storage in Cushing, Oklahoma, the delivery point for the WTI Crude Oil futures (/CL) contract, fell by 1-million barrels last week to 19-million barrels.

The U.S. crude oil rig count remained unchanged last week at 433 rigs during the reporting period ending June 19. That is down 1.1% from a year ago 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® (+0.91%), the Nasdaq-100® (+1.29%), the Russell 2000® (+0.43%), and Dow Jones Industrial Average® (+0.50%) all in the green.

In Asia, major indexes closed higher, with the Hang Seng (+1.57%), the Nikkei (+0.15%), and the Shanghai (+1.16%).  

In Europe, markets were mixed by midday, with the DAX (+0.07%) trading higher, but the FTSE (–0.17%) and the CAC (–0.33%) posting losses. 

Natural gas futures (/NGQ26) ended the week lower (–0.49%), despite forecasts for widespread heat that could lift air-conditioning demand.

Crude oil weakness appeared to spill into natural gas, adding selling pressure.

For the July 2–8 period, the National Weather Service’s Climate Prediction Center expects temperatures across the Lower 48 states to range from near normal to above normal.

On the supply side, the U.S. Energy Information Administration (EIA) reported that natural gas inventories rose by 76 billion cubic feet (Bcf) for the week ending June 19, above expectations for a 74 Bcf build. Inventories are now 5.7% above the five-year average, but 1.7% below year-ago levels.

Gold futures (/GCQ26) ended Friday’s session higher (+1.20%), rebounding from seven-month lows reached earlier in the week. The move was supported by short-covering across the precious metals sector after the U.S. Dollar Index pulled back from more than 13-month highs to end the week.

U.S. Dollar Index futures (/DXU26) finished Friday’s session lower (–0.07%), as weaker crude oil prices could help ease inflation pressures and potentially encourage the Federal Reserve to adopt a less hawkish policy outlook in the coming months.

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

Dallas Fed Manufacturing Index for June (interest rates)

3-and 6-month T-bills 

New futures products are available to trade with a futures-approved account on all thinkorswim platforms: 

• Ripple (/XRP)
• Micro Ripple (/MXP)
• 100 OZ Silver (/SIC)
• 1 OZ Gold (/1OZ)
• Solana (/SOL)
• Micro Solana (/MSL)

Visit the Schwab.com Futures Markets page to explore the wide variety of futures contracts available for trading through Charles Schwab Futures and Forex LLC.