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Outlook: Energy markets are seen recovering some of their losses this morning in front of the weekly inventory report. The complex however remains on the defensive as Covid-19 headlines continue to be watched. Analysts are expecting this morning’s report to show draws in both crude and gasoline inventories, and a slight build for distillates. Outside markets however continue their downwards move this morning, with equities feeling pressure from discouraging economic data. Traders will now turn their attention to the EIA report scheduled for release at 9:30 AM CT.

Crude

• U.S. housing starts in July reportedly fell by 7.0%, a larger drop than the average estimate set at 3.2%.
• Yesterday’s weekly report from the API stated that crude oil inventories had fallen by 1.2 million barrels, in line with the 1.1 million barrel estimate.
• According to estimates from OAG Aviation, U.S. airline seat capacity has dropped by about 2.1% week-over-week. TSA data also shows passenger numbers falling below 2 million again.
• Tropical Storm Grace is expected to strengthen into a hurricane as it remains on path to Mexico.
• The September crude oil contract is trading $0.45 higher at $67.04. The 20-day and 100-day moving averages are $69.44 and $66.46 respectively. The 14-day RSI is 41.31%.
• As of 8:35 am CST: September Brent is up $0.57 at $69.60, the U.S. dollar index is 0.015 lower at 93.115 while the nearby e-mini S&P 500 futures contract is down 11.5 points at 4432.

Diesel

• The API stated in its weekly inventory report that diesel stocks saw a larger than expected build of 500,000 barrels. A Reuters’ poll estimated that the EIA will report a 300,000 barrel build.
• China’s July diesel exports reportedly fell to a 10-month low due to decreasing export quotas available to refiners.
• The September ULSD contract is trading $0.0151 higher at $2.0512. The 20-day and 100-day moving averages are $2.1092 and $2.0379, respectively. The 14-day RSI is 43.37%.

Gasoline

• The API reported that gasoline inventories fell by 1.2 million barrels compared to estimates of a 1.7 million barrel draw.
• Weekly toll road data from the government institutions in the U.S. shows passenger car volumes staying close to 2019 values. 
• The September RBOB contract is trading $0.0152 higher at $2.1808. The 20-day and 100-day moving averages are $2.1208 and $1.9992, respectively. The 14-day RSI is 43.34%.

Propane

• An OPIS poll has estimated that U.S. propane inventories will see a build of 900,000 bbl for the week ending August 13.
• At last look, Conway propane was trading up $0.01000 at $1.19000 Mt. Belvieu was trading up $0.01250 at $1.16500.