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Outlook: Energy markets are seen climbing in front of this morning’s EIA report with prices set to lock in both monthly and quarterly gains. Boosts in demand have pushed prices to see their best half since 2009, with WTI up by over 50% this year. Many analysts expect the current price momentum to continue going forward, despite concerns with the Delta strain and increasing production. Oil ministers across the globe have urged for OPEC to increase production in order to keep prices affordable. Currently it is expected that the group will add about 500,000 bpd for the month of August. Some disagreements have arisen between group members, with Russia supporting further increases in supply, while Saudi Arabia remains more cautious in regard to the Delta strain. Goldman Sachs has stated they see the group adding 500,000 bpd for several months, with the risk of additional supply only representing a $2-$3 downside to its forecast of $80/bbl in Brent. Yesterday afternoon we saw a supportive crude draw reported by the API. Analysts will turn towards this morning’s updated Weekly Petroleum Status Report to see if the large draw is confirmed, as crude stocks sit at their lowest level since March 2020.

Crude

• The American Petroleum Institute reported that U.S. crude inventories fell by 8.2 million barrels last week, exceeding analysts’ expectations. The estimate for this morning’s report is set at a draw of 4.5 million barrels.
• According to sources familiar with the matter, OPEC+ is expected to discuss the possibility of extending the current supply deal past the expiration of April 2022.
• An updated Reuters poll showed that market analysts still see crude prices continuing their rally despite recent Covid-19 surges and the potential increase in Iranian supply.
• OPEC compliance in June was seen at 115% as the group increased output by 740,000 bpd compared to May.
• The August crude oil contract is trading $0.74 higher at $73.72. The 20-day and 100-day moving averages are $71.50 and $63.79 respectively. The 14-day RSI is 68.54%.
• As of 8:20 am CST: August Brent is up $0.58 at $75.34, the U.S. dollar index is 0.187 higher at 92.236, while the nearby e-mini S&P 500 futures contract is down 5.25 points at 4276.75.

Diesel

• The API reported that distillate inventories rose by just 428,000 barrels, less than the expected build of 600,000 barrels.
• The July ULSD contract is trading $0.0163 higher at $2.1382. The 20-day and 100-day moving averages are $2.1263 and $1.9416, respectively. The 14-day RSI is 56.74%.
  

Gasoline

• Gasoline stockpiles were seen rising by 2.4 million barrels according to API figures. Analysts expect this morning’s EIA report to show a draw of 900,000 barrels.
• The July RBOB contract is trading $0.0061 higher at $2.2451. The 20-day and 100-day moving averages are $2.2091 and $2.0245, respectively. The 14-day RSI is 60.66%.
  

Propane

• An OPIS poll sees U.S. propane inventories rising by 1.39 million barrels for the week ending June 25. If confirmed, this would mark another week of slow inventory builds and seasonally low inventories.
• At last look, Conway propane was up $0.02500, trading at $1.06500. Mt. Belvieu was up $0.03250, trading at $1.07750. 
  

Natural Gas

• U.S. natural gas storage is forecast to end the injection season, running from April to October, at its lowest level since 2018.
• The August Natural Gas contract is trading $0.091 higher at $3.721. The 20-day and 100-day moving averages are $3.309 and $2.990, respectively. The 14-day RSI is 80.45%.