Morning Highlights
Morning Highlights

7.27.21 Energy markets have traded mostly steady overnight


Katie Murphy

Jul 27, 2021

Outlook: Energy markets have traded mostly steady overnight as traders continue to balance out heightened oil demand concerns with supply tightness. Crude markets have stayed close to even this morning, while the August RBOB managed to reach fresh highs. Attention will likely turn towards tomorrow’s inventory report with analysts expecting crude inventories to post a draw this week. Delta variant concerns limit gains in the markets, with equities and yields trading lower this morning. Currently analysts expect that the recent spikes in Covid may not be as detrimental to demand as last year’s surges due to vaccination rates. Road traffic data suggests that rising infection rates have yet to have a large impact on travel across most major regions.

Crude

  • Pressure due to Delta variant concerns has the crude market heading into its second monthly loss since October.
  • India will reportedly commercialize its strategic crude oil reserves in order to help balance supplies and reduce the high prices caused by OPEC+ output cuts. The country is not the first to decide this route, with Japan, China, and South Korea also adopting similar policies.
  • Analysts polled by Reuters expect that crude stocks fell by about 3.4 million barrels for the week ending July 23.
  • The August crude oil contract is trading $0.01 higher at $71.92. The 20-day and 100-day moving averages are $71.97 and $65.76 respectively. The 14-day RSI is 53.14%.
  • As of 8:50 am CST: August Brent is up $0.05 at $74.55, the U.S. dollar index is 0.086 lower at 92.563 while the nearby e-mini S&P 500 futures contract is down 15.50 points at 4398.75.

Diesel

  • The Census Bureau reported that U.S. durable goods orders rose by 0.8% in June, below the average estimate of a 2.2% increase.
  • American Airlines and Southwest Airlines are beginning to carry extra jet fuel on some flights as supply chain issues have delayed fuel deliveries to some small and mid-sized airports in the U.S.
  • The August ULSD contract is trading $0.0033 higher at $2.1543. The 20-day and 100-day moving averages are $2.1228 and $2.0015, respectively. The 14-day RSI is 55.44%.

Gasoline

  • The Nymex gasoline crack for September was seen rising to its strongest level since late May.
  • Two refinery projects in China are now facing delays in both construction and commissioning and may be pushed into next year.
  • Analysts expect that electric vehicles won’t begin to cut into oil demand until after 2030, prior to that it is only expect that efficiency improvements will disrupt demand growth somewhat.
  • The August RBOB contract is trading $0.0197 higher at $2.3280. The 20-day and 100-day moving averages are $2.2338 and $2.0752, respectively. The 14-day RSI is 58.86%.

Propane

  • Yesterday’s crop progress report showed that corn conditions had fallen by 1% in the G/E category to 64%.
  • At last look, Conway propane was unchanged, trading at $1.09500. Mt. Belvieu was also unchanged, trading at $1.09250. 

Natural Gas

  • The Overnight Earthstat Weather Model subtracted a total of 12 Cooling Degree Days over the next two weeks, pressuring markets this morning as cooler weather conditions are expected to hurt Power Burn demand.
  • The August Natural Gas contract is trading $0.075 lower at $4.027. The 20-day and 100-day moving averages are $3.750 and $3.117, respectively. The 14-day RSI is 72.08%.

As of 8:50 AM CST   WTI AugustULSD AugustRBOB AugustNat Gas August
CONTRACT HIGH71.002.31752.21704.720
RESISTANCE75.002.18772.33024.000
PREVIOUS CLOSE71.912.15102.30834.102
GLOBEX-CURRENT71.922.15432.32804.027
SUPPORT66.152.01902.24713.940
CONTRACT LOW6.500.67240.51891.521