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Outlook: Energy markets failed to hold onto their gains during the overnight session, with crude trading lower this morning while products are mixed. Currently WTI sits near an eight-week low due to yesterday’s sharp selloff. Pressure continues to stem from the recent OPEC+ decision and Delta variant concerns. Renewed restrictions in Europe and Asia have sparked new concerns that economic recovery would be further hampered. Additionally, the U.S. has warned against traveling to the U.K. and Indonesia due to increasing infections. This morning the CDC reported a 26% increase in case counts compared to last week in the U.S. Goldman Sachs has noted that the surge in Covid-19 cases could curb global oil demand by 1 million bpd for a couple months, but vaccinations will of course play a large role in the variant’s effects. After yesterday’s sell off in the macro market, equities have managed to recover slightly this morning. Overall markets remain on edge as traders keep a close eye on covid developments.

Crude

• The IEA forecasts that emissions of greenhouse gasses will rise to an all-time high in 2023 due to economic recovery.
• Russia oil and gas condensate production increased to 10.44 million bpd on July 1-19 compared to 10.42 million bpd in June.
• China’s oil imports from Saudi Arabia fell by 19% in June as the country slowed crude oil purchases due to rising prices and worsening refining margins.
• As the Olympics’ opening ceremony is set for Friday, the chief of the organizing committee did not rule out cancelling the Olympics if case counts spike.
• Goldman Sachs lowered its Q3 Brent forecast to $75 a barrel due to concerns regarding the Delta variant.
• The August crude oil contract is trading $0.08 lower at $66.34. The 20-day and 100-day moving averages are $72.09 and $65.10 respectively. The 14-day RSI is 32.38%.
• As of 9:00 am CST: August Brent is down $0.22 at $68.40, the U.S. dollar index is 0.185 higher at 93.076 while the nearby e-mini S&P 500 futures contract is up 34.50 points at 4285.75.

Diesel

• U.S. renewable diesel supply was seen hitting a record high in the second quarter of 2021. Compared to 2020, renewable diesel supply is currently up by about 25%.
• The August ULSD contract is trading $0.0061 higher at $1.9913. The 20-day and 100-day moving averages are $2.1257 and $1.9857, respectively. The 14-day RSI is 32.83%.

Gasoline

• U.S. gasoline imports sourced from Europe were seen rebounding by 57% week on week in the week ending July 15.
• The August RBOB contract is trading $0.0043 lower at $2.1061. The 20-day and 100-day moving averages are $2.2258 and $2.0542, respectively. The 14-day RSI is 35.21%.

Propane

• Crude weakness continues to place downwards pressure on the propane markets with Conway trading about 2.5 cents lower this morning.
• At last look, Conway propane was down $0.02000, trading at $1.07750. Mt. Belvieu was down $0.02000, trading at $1.09250. 

Natural Gas

• Above average temperatures continue to support futures with the Overnight Earthstat Weather Model adding 6 Cooling Degree Days over the next two weeks.
• The August Natural Gas contract is trading $0.066 higher at $3.845. The 20-day and 100-day moving averages are $3.600 and $3.063, respectively. The 14-day RSI is 71.58%.