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Outlook: Energy markets were seen extending their recent gains during the overnight session, with crude up by about 1%. Yesterday’s sharp rally higher saw WTI settling 5.6% higher after falling by about 9% last week. Brent futures this morning were also seen topping $70 a barrel but have since backed off their highs. Support stems from a weaker U.S. dollar and a brightening demand outlook. Reports that China has managed to quell its Delta variant outbreaks has added optimism into the market after recent losses were fueled by demand concerns. Additional support stems from the oil platform fire off Mexico that has taken about a quarter of the country’s output offline.

Crude

• A fire at the Pemex platform off of Mexico has left five dead and cut the country’s overall oil production by 421,000 bpd.
• Saudi Arabia’s oil exports for June were seen rising in value by 123% compared to the year prior.
• India’s July refinery crude processing rose to its highest in three months due to easing coronavirus restrictions and increasing demand. Government data shows that refiners processed about 1.9% more than in June.
• Russian oil production was seen declining to 10.41 million barrels during the August 1-23 period compared to 10.46 in July. Analysts report that the decline was mainly due to the fire at Gazprom’s processing plant.
• The October crude oil contract is trading $1.07 higher at $66.71. The 20-day and 100-day moving averages are $68.01 and $66.65 respectively. The 14-day RSI is 46.29%.
• As of 8:30 am CST: October Brent is up $0.95 at $69.70, the U.S. dollar index is 0.031 lower at 92.927 while the nearby e-mini S&P 500 futures contract is up 4.5 points at 4480.

Diesel

• Slowdowns in travel due to the Delta variant have caused airline seat capacity to drop in the U.S. and China, while Europe capacity remains strong due to vaccine passports. Last week Bloomberg Americas Airlines Index fell by 5.6% to its lowest level since February.  
• Diesel’s discount in Singapore compared to Europe will likely push excess diesel supplies out of the region and into Europe and the U.S.
• The September ULSD contract is trading $0.0193 higher at $2.0244. The 20-day and 100-day moving averages are $2.0771 and $2.0458, respectively. The 14-day RSI is 45.71%.
  

Gasoline

• An increase in congestion levels in Chinese cities such as Beijing signals strengthening road fuel demand as the nation was able to quickly mitigate much of the Delta variant's risk.
• The September RBOB contract is trading $0.0282 higher at $2.1514. The 20-day and 100-day moving averages are $2.0855 and $2.0059, respectively. The 14-day RSI is 44.90%.
  

Propane

• Yesterday afternoon’s crop progress report showed that U.S. corn ratings fell by 2% in the G/E category. Corn is now 41% dented vs the 38% 5-year average.
• At last look, Conway propane was trading unchanged at $1.14000. Mt. Belvieu was trading down $0.00750 at $1.11250.