Outlook: Energies are pulling back some of yesterday’s gains with WTI briefly trading below $100. There’s a lack of significant market movers in the headlines today, however low liquidity is helping the market make big swings. A disruption along the Keystone pipeline which cut the supply of some Canadian oil to US refiners has provided a bump off the lows, but the focus today appears to be demand loss and recession. Gas prices have declined for 35 consecutive days according to AAA as products supplied in the US have seen declines in recent EIA data. Jet fuel demand has also begun to flatten out while passenger throughput remains well below 2019 levels. Biden returned from his Middle East trip without a formal commitment for increases in production and Saudi Arabia’s Foreign Minister said there’s no shortage of global oil supply but rather a shortage in refining capacity. RBC says OPEC+ will maintain their production targets despite the White House’s plea for more oil production from members of the group.
Crude
- OPEC+ is likely to make another modest supply hike during its next meeting, according to RBC.
- The Saudi Foreign Minister Prince Faisal bin Farhan said there’s no lack of oil across global oil markets, but rather a lack of refining capacity to meet demand.
- Libya’s Prime Minister indicated the country is on track for a full resumption of exports after replacing the state-run oil company’s leadership.
- US waterborne crude imports fell by 445,900 bpd in the week ended July 15, according to Bloomberg AHOY data.
- The EIA forecast that US production will increase by 136,000 bpd between July-August.
- The August WTI contract expires on Wednesday.
- WTI crude’s discount to Brent crude has expanded to its widest level since March.
- The API will report its inventory survey at 3:30 CST.
- Reuters estimates crude inventories rose by 300,000 barrels last week.
- As of 8:36 am CST: Brent crude oil down $1.84 to $104.43, US dollar index down $0.843 to 106.523 while the nearby e-mini S&P 500 futures contract is up 39.25 to 3873.00.
Diesel
- Global jet fuel demand from commercial passenger flights grew just 0.1% week-over-week.
- US passenger throughput sits at 87.9% of the equivalent week in 2019.
- Reuters estimates diesel inventories rose by 1.2 million barrels last week.
Gasoline
- The Nymex gasoline crack spread settled at its weakest level since April.
- The Google mobility index dropped 1.8% in the week to July 13th.
- US average retail gasoline prices fell below $4.50 for the first time since mid-May.
- Reuters estimates gasoline inventories fell by 700,000 barrels last week.
Propane
- Conway is trading at $1.1325 and Belvieu is trading at $1.1475.
- There has been no update on the Medford, OK facility that has been shut down for over a week following an explosion.
- Conway is trading at 46% of crude.
- The US is exporting 64% of production as of 7/13.
Natural Gas
- Total US gas demand increased by 0.6 Bcf/d to 96.6 Bcf/d yesterday.
- The EIA forecasts that US gas production will increase by 748 mmcf/d between July and August.
- Last night’s weather runs were unchanged.
Retail Gas Price: US retail gas prices have fallen below $4.50 to $4.4950 for the first time since May. Demand loss was seen in last week’s EIA data which raises the question if demand destruction is occurring due to elevated prices. Prices have fallen more than 10% and are on a 35-day slide, the longest run of declines since April 2020.
