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Outlook: Brent is above $76 and WTI is just under $74 as crude and products are set for a weekly gain amid tightening global supplies. Gains limited as dollar is stronger and equities are weaker. Current supply and demand balances and the prospect for the 400,000 bpd increase in crude supply from OPEC+ starting this weekend should act to keep the energy complex comfortable at current values in the near term.

Crude

• Even as delta related Covid cases increase in Asia, Europe and the U.S., analysts suggest widespread lockdowns may not be necessary as vaccination rates increase.
• The 7-day average Covid case count globally exceeded 600,000 per day. Current cases revolve around the Delta variant, but a potentially worse variant called Lambda is something to monitor.
• Saudi Arabia is expected to raise prices to its customers in Asia for September with analysts expecting they will increase their official selling price for Arab light by $0.36 on average.
• There was an attack on an oil tanker off the coast of Oman that resulted in the death of two crew members, the ship’s operator Zodiac Maritime said in a statement. An investigation is underway, but the company had previously said it suspects it was an act of piracy.
• Saudi Arabia is expected to raise prices to its customers in Asia for September with analysts expecting they will increase their official selling price for Arab light by $0.36 on average.
• As of 9:40 am CDT: September Brent is up $0.16 to 76.21, the U.S. dollar index is 0.196 higher at 92.060 while the nearby e-mini S&P 500 futures contract is down 15.00 points at 4,397.00.

Diesel

• ULSD is trading slightly below even on the day. With current trade at 2.1885 the early July high of 2.2101 is the next resistance level. Shorter term moving average support comes in at 2.1650.
• China is expected to reduce diesel exports to 170,000 bpd in July, which would be the lowest year to date levels.

Gasoline

• The nearby RBOB crack spread is 23.94 and has been increasing since mid-June when the RBOB crack traded at a low of 17.87. the upward trend in gasoline crack is supportive to the entire energy complex as it is a sign of strengthening demand.

Propane

• Propane saw a strong move yesterday with gains linked to strong international demand and a strong export flow from the US (see chart below).
• Saudi Arabia increased the price for propane to its highest in seven years.

Propane exports remain strong and rose to 1.531 million barrels last week.