Outlook: Petroleum prices have fallen lower again this morning as demand woes and potential supply increases pressure markets. Yesterday’s surprise jump in gasoline inventories led to speculation that the U.S. has yet to make it out of the pandemic demand rut. Gasoline demand on yesterday’s EIA report was seen pulling back from the previous week’s record levels, but the four-week moving average has still managed to climb back to 2019 levels. Progress between UAE and Saudi Arabia in regard to OPEC talks has also caused weakness, as traders expect additional supply to enter the market and hamper recent price rallies. Despite demand concerns regarding the Delta variant, OPEC has stuck to its forecast for strong recovery in its most recent report. The group expects oil demand to rise to 99.86 million bpd in 2022, similar to levels seen in 2019. Overall markets seem on track for a slight correction due to supply and demand concerns, with OPEC and Covid-19 headlines remaining in focus.
- China’s crude oil throughput in June hit 14.8 million bpd, up from 14.25 million in May. This marks a new record in crude throughput for June, up by 3.9% on a daily basis compared to the previous record set in May.
- Negotiations between the U.S. and Iran over the revival of the 2015 nuclear deal will not resume until mid-August, helping to limit losses in the market.
- A note from Citigroup states that the company still expects Brent oil prices to push into the mid $80s despite additional supply from OPEC+.
- Jobless claims were seen hitting a new pandemic low of 360,000 last week, with the total receiving benefits now sitting at less than half of where it was a year ago.
- OPEC forecasts that U.S. shale production will resume its growth in 2022.
- The August crude oil contract is trading $0.85 lower at $72.28. The 20-day and 100-day moving averages are $73.31 and $65.41 respectively. The 14-day RSI is 51.42%.
- As of 9:30 am CST: August Brent is down $0.68 at $74.08, the U.S. dollar index is 0.109 higher at 92.519, while the nearby e-mini S&P 500 futures contract is down 16.00 points at 4351.75.
- According to the International Air Transport Association, Asian air travel may take up to three years to recover fully to pre-pandemic levels, causing headwinds for jet fuel refiners. Currently Asian jet fuel margins are far below pre-pandemic levels.
- The August ULSD contract is trading $0.0218 lower at $2.1217. The 20-day and 100-day moving averages are $2.1354 and $1.9784, respectively. The 14-day RSI is 50.25%.
- Gasoline demand was seen faltering last week as levels failed to sustain the swell in demand leading up to the July 4th holiday weekend.
- The European Commission has proposed that the sale of all new cars and vans that produce CO2, including plug-in hybrids, be banned as of 2035.
- The August RBOB contract is trading $0.0273 lower at $2.2662. The 20-day and 100-day moving averages are $2.2310 and $2.0463, respectively. The 14-day RSI is 54.74%.
- Some weakness in propane today as pressure stems from drops in the crude and product markets. Yesterday’s EIA report showed another week of below average inventory builds for propane.
- At last look, Conway propane was down $0.00250, trading at $1.08750. Mt. Belvieu was down $0.00500, trading at $1.09500.
- The EIA reported this morning that natural gas stockpiles rose by 55 Bcf last week.
- The August Natural Gas contract is trading $0.038 lower at $3.622. The 20-day and 100-day moving averages are $3.526 and $3.040, respectively. The 14-day RSI is 66.37%.
|As of 9:30 AM CST||WTI August||ULSD August||RBOB August||Nat Gas August|