Futures Sell the Signature, Physical Markets Still Wait

Energy futures sold off again as the market treated the signed U.S.-Iran memorandum as a de-risking event, but the physical data does not confirm a full reset. WTI July fell $2.81 to $73.98, Brent July fell $2.44 to $77.11, and ICE gasoil July fell $48 to $858. Gasoil July/September remains +$24 and July/December remains +$67, so the curve is still backwardated after a 5.30% drop in the front month. Verified Hormuz crossings were only 6 on June 17, after 10 on June 15 and 14 on June 16. Persian Gulf crude and condensate transits are still near 4 mbd in June versus roughly 15 to 16 mbd in January and February. The screen priced the signature. The ships have not confirmed normality. Futures are definitely trading ahead of themselves.

The U.S. inventory picture also argues against declaring the energy problem solved. Commercial crude stocks fell to 418.2 million barrels from 426.5 million barrels, Cushing fell to 20.0 million barrels from 21.6 million barrels, and SPR stocks fell to 340.3 million barrels from 349.2 million barrels. Total crude including SPR fell to 758.5 million barrels from 775.7 million barrels. Broader U.S. crude, gasoline, distillate and jet fuel storage is near 1.115 billion barrels, close to the bottom of the 5-year range. Futures are trading a political improvement, while the U.S. physical buffer remains thin.

Soybean oil followed energy lower, but the relative value problem did not improve. July soybean oil fell 2.06 c/lb to 69.48 c/lb, or $1,531.76/mt. July bean oil expressed as a percentage of gasoil rose to 178.63%, up 2.61% on the day. July BOGO remains +$673.76 and July BOPO remains +$402.26, even after BOPO fell $45.41 on the day. Diesel fell faster than feedstock, so biodiesel economics did not improve as much as the flat soybean oil break suggests. Dec D4 RINs are still 2.390, and with RINs holding while soybean oil breaks, the July RD screen crush improved to 0.3921 and the July conventional biodiesel crush improved to 0.8479. Conventional Biodiesel is definitely running at highest capacity right now in US yet only one plant has restarted (Future Fuels).

European biofuel paper also remains firm through yesterday’s window. ARA trades on June 17 printed UCOME at $685 to $690/mt over gasoil, RME at $600/mt over gasoil, FAME 0 at $570/mt over gasoil, and HVO Class II at $1,428/mt over gasoil. Using today’s July gasoil at $858/mt, this implies indicative flat values near $1,543 to $1,548/mt for UCOME, $1,458/mt for RME, $1,428/mt for FAME 0, and $2,286/mt for HVO Class II. These values do not show a physical market flooded with cheap replacement barrels. They show a market where the paper selloff has moved faster than spot availability.

China is also back in the soybean story. USDA confirmed 132,000 mt of soybeans to China for 2026/27, 120,000 mt to unknown destinations, and the earlier 372,000 mt sale to unknown destinations included 312,000 mt for 2026/27 and 60,000 mt for 2025/26. This matters because soybean oil is breaking at the same time export demand is resurfacing. Reported Oct-March U.S. soybean interest fits the same pattern, with replacement values showing U.S. Gulf Oct near 295 c/bu and PNW Oct near 260 c/bu versus Santos Oct near 248 c/bu. With Chicago closed Friday for Juneteenth, today feels more like holiday de-risking than a durable reset. The agreement changed sentiment. The physical market still has to prove it.