Outlook: Energies selling off this morning with crude and diesel down 5% and gas down 3%. With softer economic data being reported overseas, global recession fears have hopped in the driver’s seat. The US dollar index has once again pushed up to 20-year highs while the DJIA and S&P are down 2% this morning. Citigroup Inc made the statement that oil could fall as low as $65 if the recession significantly affects demand. OPEC’s secretary-general also commented on Iran and Venezuela saying that eased sanctions could quickly help the tightening supply situation. Supply threats will act as support through the selloff with Norway expected to reduce output by 130,000 bpd tomorrow and Libya declaring force majeure due to ongoing protests. Inventory data will be released a day later due to the holiday with the API reporting at 3:30 CST on Wednesday and the EIA reporting at 9:30 CST on Thursday.
Crude
- Norway has begun its strike which has reduced oil production by 62,000 bpd.
- Norway will extend the strike on Wednesday and oil production is expected to drop by 130,000 bpd.
- OPEC Secretary-General Mohammad Barkindo said today that the energy supply shortage could be eased if extra supplies from Iran and Venezuela were allowed to flow.
- Saudi Arabia increased their August oil prices by $2.80 to $9.30, which is nearly a record high for OSP. The hike is driven by returning Chinese demand.
- Citigroup Inc said crude could fall to $65 this year if recession impacts demand.
- Baker Hughes reported US oil rig counts increased by 1 last week to 219.
- The API and EIA will report their inventory data a day later due to the holiday.
- Reuters is estimating a draw of 1 million barrels in crude stocks last week.
- The US dollar index has pushed to 20-year highs at $106.607.
- As of 9:20 am CST: Brent crude oil down $6.52 to $106.98, US dollar index up $1.462 to 106.600 while the nearby e-mini S&P 500 futures contract is down 72.25 to 3755.00.
Diesel
- In the week to June 28th, global jet fuel demand from commercial flights grew 1.8% week-on-week.
- Reuters is estimating a 900,000 barrel build in diesel stocks for last week.
Gasoline
- The Google mobility index grew by 0.5% in the week to June 29th.
- Reuters is estimating a 410,000 barrel draw in gasoline stocks for last week.
Propane
- Conway is trading at $1.1600 and Belvieu is trading at $1.1950.
- 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
- Total US gas demand declined by 4 Bcf/d over the weekend.
- US natural gas rigs declined by 4 last week.
- Overnight weather runs removed 9 CDDs from the two-week forecast.
Retail Gas Prices: Retail gas prices have fallen for 21 consecutive days which is the longest losing streak since April 2020. Gasoline consumption last week was at its lowest seasonally since 2014 according to EIA data. Inventories have built by more than 4 million barrels over the past two weeks when they typically decline during this time period.
