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June 9 - By Liz Hampton

U.S. energy markets editor

Hello Power Up readers! Oil prices are steady to kick off the week ahead of U.S.-China trade talks in London on Monday. Any trade deal between the two countries could support the global economic outlook, boosting demand for commodities like oil. Brent crude futures were at $66.58 a barrel, up 11 cents, while U.S. West Texas Intermediate $(WTI)$ futures were at $64.64, up just a few cents. U.S. Henry Hub natural gas futures were trading at $3.588, down more than 5%.

OPEC's May output rises less than planned

And California's fuel imports hit 4-year high

The market is keeping a close eye on OPEC, which is unwinding output cuts at a faster rate than originally planned to punish over-producers. OPEC+, which includes members like Russia, has vowed to increase output by 411,000 bpd for May, June and July.

May's output from OPEC, however, rose by less than expected, a Reuters survey found, as Iraq made cuts to compensate for pumping above targets and Saudi Arabia and the United Arab Emirates made smaller hikes than permitted.

In total, OPEC pumped 26.75 million bpd last month, up 150,000 bpd from April's level. The largest increase came from Saudi Arabia, which boosted output by 130,000 bpd.

Eight OPEC+ members, five of which are members of OPEC, were to raise output by 310,000 bpd. The five members include Algeria, Iraq, Kuwait, Saudi Arabia, and the UAE. The actual increase by the five was 180,000 bpd.

Surveys around OPEC production can vary. Reuters' April data, which was provided by OPEC's secondary sources, showed the group pumping close to quotas, while other estimates, including from the International Energy Agency, indicated the group is producing significantly more.

A little further downstream, California's fuel imports rose to the highest level in four years in May amid a slew of refinery outages, Shariq Khan and Nicole Jao reported. The shortage of fuel has opened up unusual trade routes, including from the Bahamas, which shipped a record 38,000 bpd to the state. Fuel shipments from the Bahamas averaged just 6,000 bpd last year.

The jump in imports could offer a window into California's fuel markets in the coming years, as Phillips 66 and Valero close two major refineries in the state amid growing regulatory and cost pressures. The state is expected to become more dependent on imports, which could raise prices at the pump.

Finally, solar company Sunnova Energy on Sunday said it had filed for Chapter 11 bankruptcy, as it buckled under the pressure of mounting debt and weak demand. Sunnova is the second residential solar company to file for bankruptcy this month, after privately held Solar Mosaic filed for bankruptcy protection.

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ESSENTIAL READING

The U.S. has suspended licenses for nuclear equipment sales to China's power plants, Reuters reported on Friday. This marks the latest product to be caught in the cross-hairs of the U.S.-China trade war in recent weeks. Shipments of butane and ethane, used heavily by China's petrochemical industry, are also facing export restrictions.

The U.S. Interior Department has approved a plan by Montana-based Signal Peak Energy to expand coal mining and provide exports for Japan and South Korea. The approval will authorize the company to recover 22.8 million metric tons of federal coal and 34.5 million tons of adjacent non-federal coal, while also extending the life of a mine.

Shell last week reported a fire at a furnace at its Pennsylvania Petrochemicals complex and took the unit offline to conduct an investigation.

HSBC on Friday said it expects OPEC+ to accelerate supply hikes in August and September, raising downside risks to the bank's $65 a barrel Brent forecast for the final quarter of the year. It expects the oil market to show a surplus of 300,000 bpd for 2025 and 900,000 bpd for 2026.

The U.S. Department of Transportation on Friday paved the way for looser U.S. fuel economy standards by declaring that the former Biden administration exceeded its authority by assuming high uptake of electric vehicles in calculating its rules.

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(Editing by Marguerita Choy)

((liz.hampton@thomsonreuters.com))