Key facts
- China's crude oil imports are projected to fall significantly in July.
- US LNG exports to Egypt increased in May.
- Global oil inventories risk declining to critical levels before summer demand peaks.
- US gasoline stocks are at their lowest level since 2014.
- US Strategic Petroleum Reserve crude inventories decreased by approximately 8.0 million barrels week-over-week.
- Japan's crude oil imports in April fell 65.7% year-on-year, marking a record low.
- US corn crop health ratings are at 67% good/excellent, the lowest since 2019.
- US soybean crop health ratings are at 66% good/excellent, the lowest since 2023.
- The US wheat crop faces damage from late-season rainfall during harvest.
- European steel exports to the U.S. have decreased by 34% following a U.S. tariff hike to 50%.
- US direct lending issuance fell 40% in the three months ended May 2026.
- European natural gas prices have decreased.
Global oil markets are navigating a complex landscape marked by declining Chinese crude imports and shifting US LNG export destinations. China's crude oil imports are projected to fall significantly in July, potentially by nearly 40% year-over-year, which is helping to cushion global oil markets and keep prices below $100 a barrel. Concurrently, Egypt has emerged as the top destination for US LNG cargoes in May, as Europe's share of these exports decreased, signaling evolving global energy trade dynamics. The International Energy Agency (IEA) has issued a warning that global oil inventories risk declining to critical levels before the summer demand peak, a situation that could persist for months even if geopolitical tensions ease. This market fragility is underscored by substantial inventory draws; US gasoline stocks remain at their lowest level since 2014 despite a recent build, and crude inventories continue to fall, with Cushing nearing tank bottoms. US Strategic Petroleum Reserve (SPR) crude inventories decreased by approximately 8.0 million barrels week-over-week, with sour crude inventories falling by 5.4 million barrels and sweet crude by 2.6 million barrels. The total crude draw for the week was 16.15 million barrels. Japan's crude oil imports in April hit a record low, falling 65.7% year-on-year, with the country increasingly relying on US crude supplies. India's refined product exports have reached their lowest point since October 2022, as the nation prioritizes domestic energy security and has restored its crude inventory buffers. OPEC+ is set to relax its output targets in response to market dynamics, following a period where its crude output hit a 37-year low. Oil prices have seen volatility, falling around 3% on hopes for a US-Iran deal and a ceasefire between Israel and Lebanon, which raised expectations for the reopening of the Strait of Hormuz. However, prices stabilized as Oman reported normal operations at its Mina al Fahal port, with Brent crude for August delivery rising to $95.36 a barrel. The discount on Western Canada Select crude oil has narrowed, impacting the pricing differential with lighter benchmarks. Glencore has sold WTI Midland crude oil cargoes to Total and Moeve. Tanker traffic has partially recovered to an estimated 60-70% of pre-war levels, indicating a more fragmented shipping environment, with Iranian exports reportedly decreasing by approximately 90%.
In agriculture, US crop conditions are deteriorating. US corn crop health ratings are at 67% good/excellent, the lowest since 2019, and soybean ratings are at 66% good/excellent, the lowest since 2023. Spring wheat ratings also declined below pre-report estimates. Drought has receded in key northern plains and Canadian growing regions, and the winter wheat harvest has begun. The US wheat crop, which experienced minimal moisture during its growing cycle, is now facing heavy rainfall during harvest, expected to negatively impact quality and yield. CBOT wheat futures declined due to favorable US crop weather and ample global supplies. Next week's US corn export inspections are projected at 1.90 MMT, a 10% increase from the previous week. Conversely, soybean inspections could be 600,000 MT, down 16% from the prior week. In contrast, crop-finishing rainfall is forecast for Southern Brazil, expected to increase yield potential for safrinha corn. Farmer sentiment weakened in May, with the Purdue/CME Ag Economy Barometer falling to 119, primarily driven by a drop in the Current Conditions Index.
In other sectors, European natural gas prices have decreased, but concerns about winter supply persist due to low storage levels, limited Russian pipeline gas, and Norway operating at maximum capacity. US natural gas spot prices at Waha and the Permian Basin have turned negative since February 5, indicating regional oversupply. LNG feedgas demand is projected to decrease by 0.6 BCF/d to 16.2 BCF/d, though this is still an increase compared to 2025 levels. US natural gas futures declined as domestic gas flows to LNG export terminals along the US Gulf Coast dropped for a third consecutive day. California natural gas prices reached historic lows in early 2026. US diesel futures for December 2026 delivery are approaching a 52-week high. US retailers may face challenges as rising gas prices and economic strain reduce consumer spending power, with consumers prioritizing essentials. The US has reduced tariffs on farm and industrial equipment to ease financial pressures. Used construction equipment inventories decreased in May, while rental demand remains strong. The ongoing slump in manufacturing-facility construction is contrasted by a significant data-center buildout. European steel exports to the U.S. have decreased by 34% following a U.S. tariff hike to 50%. Nitrogen fertilizer prices continue their downward trend. Private credit issuance fell significantly in the three months ended May 2026, with investor commitments below 2023 peaks and May flows dropping 35% month-on-month. Software companies have been supplanted as the leading sector in the leveraged loan market. Americas Styrenics is idling its California plant. ICIS has acquired the AMI Plastics Market Intelligence Dataset to enhance insights into global polymer demand. Japan's Prime Minister stated that the country's petrochemical supply is expected to last beyond the fiscal year. BMO has issued a recap of the chemical sector. Dry bulk rates decreased, while VLCC tanker rates increased. The Ulster Farmers' Union states that beef processors have cut prices too aggressively, pushing family farm businesses into an unsustainable position.