Outlook: Energies are rebounding to start the morning after two days of significant selloffs. Buying is likely coming back into the market with oil and products in oversold territory after the declines to start the week. The market is still trading between recession fears and supply fundamentals as it looks to find firm ground to stand on. Shanghai is once again at risk for another lockdown if covid cases persist but conversely is considering a $220 billion dollar stimulus deal to bolster their economy. The EIA will report inventories this morning. The API survey showed a build of 3.8 million barrels in crude which is likely fueled by SPR releases, while products both showed draws. Demand will be a growing focus over the next several reports as peak driving season is underway amidst elevated prices and questions regarding demand destruction.
Crude
- Shanghai is expected to complete its mass testing of 25 million people tonight after they reported their highest number of covid cases since May.
- China’s Ministry of Finance is considering allowing local governments to sell $220 billion worth of special bonds for economic stimulus measures.
- Citigroup has reduced its demand forecast by around a third to 2.5 million bpd, similar to EIA and IEA forecasts.
- Oil remains flowing through the Caspian pipeline which supplies 1% of global oil despite a Russian court order to suspend flows for 30 days.
- The net spec and fund long in crude oil is nearing the lowest levels in 8 years.
- WTI’s prompt spread surged to its highest level in four months on Wednesday.
- The EIA will report inventories at 9:30 CST.
- The API survey showed a 3.8 million barrel build in crude inventories for last week.
- Reuters is estimating a 1.1 million barrel draw in crude inventories.
- As of 8:35 am CST: Brent crude oil up $3.43 to $104.10, US dollar index down $0.006 to 107.090 while the nearby e-mini S&P 500 futures contract is down 32.25 to 3880.00.
Diesel
- The API survey showed a 640,000 barrel draw in diesel inventories for last week.
- Reuters is estimating a 1.1 million barrel build in diesel stocks.
Gasoline
- The API survey showed a 1.8 million barrel draw in gas inventories for last week.
- Reuters is estimating a 480,000 barrel draw in gasoline stocks.
Propane
- Conway is trading at $1.1200 and Belvieu is trading at $1.1550.
- An OPIS poll estimates a build between 500,000 barrels and 2.7 million barrels for propane.
- Conway is trading at 47% of crude.
- The US is exporting 55.2% of production as of 6/24.
Natural Gas
- Total US gas demand increased by 1.2 Bcf/d to 95.9 Bcf/d yesterday.
- The EIA is expected to report a 73 Bcf injection.
- Overnight weather runs added 1.4 CDDs through the two-week forecast.
Total Oil Products Supplied: Products supplied are an indicator of US demand excluding exports. Total oil product demand remains in line with seasonal averages however any sign of decline will be closely monitored as the threat of recession looms.
