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Outlook: Despite the surprise crude build reported in yesterday’s API report, energy markets are trending higher this morning likely due to increasing risk appetite. Additionally, key support was found at the 100 day moving average of $66.15, helping prices bounce higher. Traders, however, will still look to see if the rise in crude inventories is confirmed on this morning’s EIA report. Analysts were originally expecting this week to mark the ninth consecutive week of crude inventory draws. Equities also push higher this morning despite continued concerns regarding Covid-19. Tokyo’s case counts were seen rising to a six-month high today, with the Olympics still set to open Friday. The organizers have still not ruled out cancelling the Games if cases were to spike profoundly. The Director of the World Health Organization warned that the world is showing the “early stages of another wave”. Heightened volatility is expected to remain in both the energy and equity markets as traders attempt to navigate through current pandemic related issues.

Crude

• Yesterday afternoon’s API inventory report showed a surprise build of 806,000 barrels for the week ending July 16. Analysts expect this morning’s Weekly Petroleum Status Report to show a 4.2 million barrel draw.
• The Department of Homeland Security has announced that owners and operators of critical pipelines that transport hazardous liquids and natural gas will need to urgently implement protections against cyber intrusions.
• JPMorgan sees global demand averaging at 99.6 million bpd in August, up by 5.4 million compared to April
• The August crude oil contract is trading $1.22 higher at $68.42. The 20-day and 100-day moving averages are $72.00 and $66.15 respectively. The 14-day RSI is 42.17%.
• As of 8:15 am CST: August Brent is up $1.32 at $70.67, the U.S. dollar index is 0.093 higher at 93.066 while the nearby e-mini S&P 500 futures contract is up 9.25 points at 4324.75.

Diesel

• United Airlines has reported that they will be ramping up flights during the third and fourth quarters after the recent resurgence in air travel.
• Yesterday the API reported a 1.2 million barrel draw in distillate inventories compared to expectations of a 100,000 barrel build.  
• The August ULSD contract is trading $0.0341 higher at $2.0468. The 20-day and 100-day moving averages are $2.1225 and $1.9884, respectively. The 14-day RSI is 43.49%.

Gasoline

• Yesterday the API reported a large build of 3.3 million barrels compared to analysts’ expectations of a 1.4 million barrel draw.
• The White House has reportedly delayed its annual process of deciding biofuel mandates as it looks to solve issues pitting the U.S. farming industry against the refining industry.
• The August RBOB contract is trading $0.0235 higher at $2.1550. The 20-day and 100-day moving averages are $2.2241 and $2.0576, respectively. The 14-day RSI is 42.92%.

Propane

• Analysts expect propane stocks to rise by 1.486 million barrels on this morning’s EIA report.
• At the close, Conway propane was down $0.01000, trading at $1.05250. Mt. Belvieu was down $0.01500, trading at $1.05750. 

Natural Gas

• Earthstat Weather Model continues to add Cooling Degree Days, with nearly 13 being added in the last few days and two being added overnight.
• The August Natural Gas contract is trading $0.028 higher at $3.904. The 20-day and 100-day moving averages are $3.634 and $3.074, respectively. The 14-day RSI is 74.67%.