Outlook: Energies have eased from earlier highs as the market digests a disappointing US jobs report. Choppy trade has ensued. On one hand, a poor jobs report suggests lower demand from motorists, and on the other the reaction has been lower on the dollar, which is generally viewed as supportive to commodities including energy.
Crude
- August US nonfarm payrolls rose 235,000, a big miss compared to expectations for a 750,000 increase and well below July’s increase of 1.053 million.
- Combined oil shipments from 5 West Africa OPEC members fell to below 3 million bpd in August, the lowest since 2013, Kpler data showed. Total OPEC+ exports fell 1.1 million bpd in August to 25.1 million bpd as nations consumed more oil at home and more was added to storage.
- The Biden administration will allocate $2.7 billion for the production of Covid vaccine. The funds will be intended to increase ingredients and supplies used to make the vaccine.
- Russia’s Energy Minister Pavel Sorokin said oil prices may return to $55 to $60 once oil output returns to pre-pandemic levels.
- Today’s August nonfarm payrolls report showed oil and gas extraction jobs rose by 800 m/m and were up 4,200 from a year earlier.
- Bloomberg NEF suggests carbon policy changes will pose the greatest long term risk to refiners.
- There are no formal talks scheduled with Iran over its nuclear program but discussions are expected at the sidelines of the IAEA’s general conference in late September.
- As of 9:52 am CDT: November Brent is $0.08 lower to $72.95, the U.S. dollar index is 0.150 lower at 92.075 while the nearby e-mini S&P 500 futures contract is down 8.00 points at 4,527.25.
Diesel
- At 2.1621 currently, ULSD is off slightly on the day. The 2.2100 price zone is resistance as it represents the high of the year from July and the 50-day moving average acts as support at 2.1050.
Gasoline
- Its anticipated the Phillips 66 refinery in Alliance, Louisiana will be down for all of September. Some power has been restored at PBF’s Chalmette refinery and likely at Valero’s Meraux plant.
- Some work planned at a few refineries in the Gulf have been pushed back to later dates this fall in an effort to maximize current production.
- Facts Global Energy anticipates strong gasoline demand in China in September as the covid situation improves and after the seasonal rains subside. They anticipate demand will increase by 200,000 bpd m/m to 7.2 million bpd.
Propane
- US propane inventories are low and so are days of supply as shown in the chart below. Propane sits on firm fundamental footing and if short we recommend coverage. Indicatively we view the Oct/Nov/Dec Conway propane swap strip at $1.22/gallon.
Natural Gas
- Natural gas futures in the nearby contract are 5.5 cents higher to 4.696 amid lower production due to the impact of Hurricane Ida and supportive weather models.
- BSEE sees 2.035 bcf/day or 91.3% of natural gas production remains down in the Gulf of Mexico.
- Natural gas inventories are 579 bcf less than a year ago and 222 bcf below the 5-year average.
US Propane days of supply:
