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Outlook: The energy market has managed to recover some of the losses seen during yesterday’s session. Attention remains on OPEC proceedings, but it seems that inventories will likely remain tight in the near term. The Biden Administration has recently reported that it is “encouraged” by the ongoing talks and has spoken to several officials in Saudi Arabia and UAE. The U.S. is hoping for an agreement that will lead to more affordable energy, as high gas prices had recently become a topic of discussion. Most analysts remain confident that the current talks will lead to a controlled increase in production, but traders still balance the possibility of a unilateral increase if no deal can be made. Focus will remain on OPEC headlines and also look towards the upcoming inventory reports set to be released this afternoon and tomorrow morning. Current estimates expect this week to show additional tightening of crude supplies.

Crude

• Several banks including JPMorgan Chase & Co still expect OPEC+ to eventually agree to a 400,000 bpd monthly increase in production for the remainder of 2021.
• Sources at U.S. shale companies say they are not taking advantage of current OPEC turmoil to increase production and lock in high prices due to the market’s volatility. While shale producers typically boost production when prices rise, the group has recently been breaking this trend even after oil topped $70.
• At least five Asian oil refiners are still planning to seek their full contractual volumes from Saudi Arabia despite the recent increase in selling prices.
• The August crude oil contract is trading $0.01 higher at $73.38. The 20-day and 100-day moving averages are $72.51 and $64.50 respectively. The 14-day RSI is 61.54%.
• As of 9:00 am CST: August Brent is up $0.12 at $74.65, the U.S. dollar index is 0.085 higher at 92.631, while the nearby e-mini S&P 500 futures contract is up 9.75 points at 4343.75.

Diesel

• TSA screenings were finally seen surpassing 2019 levels for the first time in the pandemic-era. Screenings reached 2.15 million people on Thursday, up by 3% compared to July 1, 2019.
• American Airlines reported that its passenger volume was three times more over the July 4^th weekend compared to last year. The airline company reportedly carried 2.7 million travels between July 1 and July 5.
• The August ULSD contract is trading $0.0077 higher at $2.1126. The 20-day and 100-day moving averages are $2.1301 and $1.9577, respectively. The 14-day RSI is 52.01%.

Gasoline

• Current OPIS demand estimates see a strong week-on-week jump for the upcoming inventory report, with demand expected to be at just a single-digit deficit to the same week in 2019.
• The August RBOB contract is trading $0.0045 lower at $2.2237. The 20-day and 100-day moving averages are $2.2196 and $2.0446, respectively. The 14-day RSI is 54.30%.

Propane

• Starting the day slightly lower, but direction still remains bullish with propane prices resisting strongly against yesterday’s sharp drop in crude prices.
• At last look, Conway propane was down $0.00750, trading at $1.10250. Mt. Belvieu was down $0.01000, trading at $1.12000. 

Natural Gas

• The August Natural Gas contract is trading $0.051 lower at $3.586. The 20-day and 100-day moving averages are $3.415 and $3.015, respectively. The 14-day RSI is 68.44%.