Outlook: Higher trade this morning for the energy complex as Middle Eastern tensions help to support prices. Despite this morning’s gains, the oil complex is still on track to post a weekly loss due to coronavirus concerns. Both the Brent and WTI benchmark contracts have given up more than 5% this week. End of summer travel is expected to be hurt by new restrictions as the Delta variant continues to spread. Traders will likely be wary of risk in both energy and equity markets as case counts continue to rise. The daily new Covid-19 case count in the U.S. was seen climbing to a new six month high, with the seven day average reaching almost 95,000 cases. Support however stems from tensions in the Middle East after Israel launched an attack on Lebanon. Strong economic data this morning has also pushed energies and equities higher. As the complex heads into its worst weekly performance this year, markets will be keeping a close eye on further Covid-19 developments to gauge direction for next week.
- The Labor Department reported that U.S. payrolls were seen increasing in July by 943,000. U.S. employers were added the most jobs in almost a year, signaling a strengthening economy.
- U.S. Treasury yields were seen climbing higher this morning after the unemployment rate reportedly fell to 5.4%.
- United Airlines announced that it will be requiring all 67,000 of its U.S. employees to get vaccinated, the first domestic carrier to enact this mandate.
- China has imposed new restrictions to help curb the spread of Covid-19, causing traffic congestion to fall by about 20% week on week.
- The September crude oil contract is trading $0.09 higher at $69.18. The 20-day and 100-day moving averages are $71.19 and $66.41respectively. The 14-day RSI is 45.56%.
- As of 8:45 am CST: September Brent is up $0.41 at $71.70, the U.S. dollar index is 0.394 higher at 92.638 while the nearby e-mini S&P 500 futures contract is up 9.75 points at 4431.25.
- China’s current jet fuel demand is seen near or above levels last seen in 2019, between 880,000 and 947,000 bpd. Aviation data from OAG reported that passenger seat capacity in China, from February through July, was about 1 million more than the same period in 2019.
- The September ULSD contract is trading $0.0008 higher at $2.1068. The 20-day and 100-day moving averages are $2.1237 and $2.0182, respectively. The 14-day RSI is 63.06%.
- Vehicle miles traveled on highways in the U.S. for the week ending August 1 were seen at similar levels to the same week in 2019. Traveled miles came in at 17 billion, down by 1% compared to the week prior.
- Gasoline demand in China is forecast to rise by 11% to 13% this year to a new record high between 3.8 million and 4.1 million bpd. This expectation however is dependent on vaccination rates helping curb the effect of the Delta variant.
- If you look past the collapse of the oil market at the beginning of the pandemic, potential profit for producing gasoline from crude is at its highest in four years. As of yesterday, the margin of a barrel of gasoline over a barrel of WTI reached over $27.
- The September RBOB contract is trading $0.0115 lower at $2.2825. The 20-day and 100-day moving averages are $2.2543 and $2.1004, respectively. The 14-day RSI is 56.01%.
- According to OPIS, signs of recovering production are being seen in the Permian Basin which could lead to some limit in upside for the U.S. propane market.
- At last look, Conway propane was trading at $1.11500 and Mt. Belvieu was trading at $1.11250.
- Quieter trade this morning, with prices down slightly overnight following the recent surge higher. Yesterday’s EIA report was seemingly bullish, as the storage deficit was seen unexpectedly increasing.
- The September Natural Gas contract is trading $0.027 higher at $4.175. The 20-day and 100-day moving averages are $3.911 and $3.217, respectively. The 14-day RSI is 65.71%.
|As of 8:45 AM CST||WTI September||ULSD September||RBOB September||Nat Gas September|