Energy markets will halt early on Monday at 1:30 CST in observance of Independence Day. Our office will not be readily staffed however, we will be available by email if needed.
Outlook: Energies are looking to rebound today following the significant sell-off yesterday. The tug-of-war between supply disruptions and economic slowdown continues with further disruption headlines pushing markets higher to start the morning. Libya continues to see supply disruptions due to protests while other OPEC+ members question spare capacity availability. Natural gas is also rebounding this morning after another hiccup at the Freeport facility combined with a larger-than-expected inventory build sent prices below six dollars for the first time since April. Propane markets have slid with the selloffs in crude and have provided buying opportunities for covering fall and winter gallons. Volatility across energy remains elevated pushing traders out of the market which has allowed for large price swings. From a hedging perspective, keeping a tight DPR during high volatility is crucial for securing profits.
Crude
- Libya’s National Oil Corporation declared force majeure at the Es Sider and Ras Lanuf ports along with the El Feel oilfield.
- Libya’s production has remained suppressed with exports down 865,000 bpd compared to their expected output.
- India announced a windfall tax on fuel and crude exports joining a growing number of nations using windfall levies on energy firms to cope with surging costs.
- OPEC+ agreed to raise output by 648,000 bpd in August. Their next meeting is on August 3rd.
- President Biden said on Thursday that he would not directly press Saudi Arabia to increase oil output during his visit this month.
- 74 Norwegian offshore oil workers at Equinor’s Gudrun, Oseberg South, and Oseberg East platforms will go on strike starting July 5th. The strike will halt around 4% of Norway’s oil production.
- WTI's open interest fell again on Thursday to its lowest levels since mid-2016, while holding across the main oil futures contracts was the smallest since 2015.
- Exxon Mobil has been forced to restrict deliveries of some fuel products from one of its two French refineries due to strike action. The refinery will fully shut down in the coming days.
- Iran’s June oil flows to India have fallen by 571,000 bpd from May. India continues to buy more Russian oil at a discounted price.
- Baker Hughes will report their rig count at 12:00 CST.
- As of 6:35 am CST: Brent crude oil up $2.15 to $111.18, US dollar index up $0.340 to 105.025 while the nearby e-mini S&P 500 futures contract is down 13.25 to 3776.00.
Diesel
- AAA reports the national average retail diesel price at $5.760, off 5 cents from the high on 6/19.
- Product crack spreads continue to favor diesel production with the diesel crack at $58 and the gasoline crack at $42.
- Scheduled flights are set to increase by 7.7% over the next six weeks.
Gasoline
- Around 42 million people will hit the road this Independence Day weekend, exceeding 2019 levels by half a million according to AAA.
- AAA reports the national average retail gas price at $4.842.
Propane
- Conway is trading at $1.1600 and Belvieu is trading at $1.2175.
- The EIA reported a build of 100,000 barrels over the last two weeks.
- Conway is trading at 46% of crude.
- The US is exporting 55.2% of production as of 6/24.
Natural Gas
- US regulators barred the Freeport LNG plant from restarting over safety concerns. New estimates for a return are 6-12 months.
- Natural gas fell 33% in June.
- The EIA reported a larger than expected build of 82 Bcf.
- The 5-year average injection is 73 Bcf.
OPEC+ Production: The 19 countries participating in the OPEC+ oil supply cut deal have raised their crude output by 255,000 bpd in May. This marked the first month that output has increased since February. Due to underproduction, the group’s supply deficit has grown to 2.77 million barrels below their output target.
