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Sector Update: Energy

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Energy stocks were declining premarket Wednesday, with the State Street Energy Select Sector SPDR ETF (XLE) 0.4% lower.

The United States Oil Fund (USO) was down 0.5% and the United States Natural Gas Fund (UNG) was 2.7% higher.

Front-month US West Texas Intermediate crude oil was 0.3% higher at $102.52 per barrel at the New York Mercantile Exchange. Global benchmark North Sea Brent crude oil rose 0.1% to $107.86 per barrel, and natural gas futures were up 2.2% at $2.90 per 1 million British Thermal Units.

FLEX LNG (FLNG) shares were 0.9% higher after the company raised its 2026 revenue guidance.

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Sectors

US Total Crude Oil Stocks Fell in Week Ended May 8

US crude oil stocks, including those in the Strategic Petroleum Reserve, fell by 12.9 million barrels in the week ended May 8 following a decrease of 7.5 million barrels in the previous week.Excluding inventories in the SPR, commercial crude oil stocks decreased by 4.3 million barrels after a 2.3-million-barrel decline in the previous week, more than the 2.0-million-barrel decrease expected in a survey compiled by Bloomberg.Stocks in the SPR fell by 8.6 million in the week after falling by 5.2 million in the previous week.Overall crude oil stocks were down 1.5% from the previous week and down 0.5% from a year earlier. Crude oil inventories are about 0.3% below the five-year average for this time of the year.Gasoline stocks declined by 4.1 million barrels, a larger drop than the 3.0-million-barrel decrease expected. Gasoline stocks were down 1.9% from the previous week and down 4.0% from a year earlier.Distillate stocks rose by 200,000 barrels in the current week, compared with an expected decrease of 2.7 million barrels. Distillate stocks were up 0.2% from the previous week but were 1% lower than in the same week a year ago.Refineries operated at 91.7% of their capacity, up from 90.1% in the previous week.

Sectors

Natural Gas Rises as Forecasts See Hotter Weather Coming for Most Markets

Natural gas traded higher early Wednesday as warm long-term forecasts offer a likely boost to cooling demand. Gas for June delivery was last seen up $0.07 to US$2.91 per million British thermal units.The National Weather Service's six to 14-day forecast see most states with warmer than seasonal temperatures, with the hottest weather expected for big eastern markets, raising the call on gas-fired generation to power air conditioners, while its longer-term outlook sees hot weather likely to persist for the next month."The long-range weather data continues to forecast a rather hot US pattern for much of June as highs of upper 80s to 100s gains in coverage across the central and southern US, while very nice to warm across the northern US w/highs of 60s-80s, locally 90s for stronger than normal CDDs/cooling demand.

$NGM6$UNG
Sectors

Gold Steady As USD Rises After U.S. Wholesale Inflation Surged Last Month

Gold was steady early Wednesday even as the dollar rose after a report showed U.S. wholesale inflation surged in April.Gold for June delivery was last seen up $2.50 to US$4,689.20 per ounce.The U.S. Bureau of Labor Statistics reported the Producer Price Index (PPI) rose at a 1.4% monthly pace from March, up from 0.7% a month earlier and well ahead of the consensus expectation for a rise of 0.5%, according to Marketwatch. On an annualized basis, PPI was up 6.0% in April, up from 4.3% a month earlier. Core PPI, excluding volatile food and energy, rose 4.4% annualized, up from 3.7% in March."The April increase is the largest advance since rising 1.7 percent in March 2022. On an unadjusted basis, the index for final demand rose 6.0 percent for the 12 months ended in April, the largest 12-month increase since moving up 6.4 percent in December 2022," the bureau noted.The report comes a day after the bureau reported the Consumer Price Index rose 3.8% year over year in April, up from 3.3% in March.Inflation has surged since the war on Iran pushed up oil prices by more than half, raising worries central banks will raise interest rates to slow rising prices, bearish for gold since it pays no interest."At the last Fed decision, three members dissented against the bank's decision to maintain its "easing bias", and the question is whether more rate setters will join that group at the next rate decision if energy prices remain high," Gustav Helgesson, Macro Strategist at SEB Research, wrote.The dollar was higher early, with the ICE dollar index last seen up 0.26 points to 98.55. Treasury yields were also higher, with the yield on the U.S. two-year note up 0.6 basis points to 4.004%, while the 10-year note was up 1.0 points to 4.48%.

$GCM6$GLD