Outlook: Energies are higher to start the week but have come off of the highs. Tight fundamentals continue to wrestle with overall economic concerns and a looming FED announcement. Natural gas has recovered much of the losses seen after the Freeport export facility shut down. Hot weather across the US has increased demand as many homes need to cool due to the heat. Europe is fighting massive energy problems and is currently looking everywhere to cut back on consumption.
Crude
- Libya expects to return to its 1.1 million barrel per day production soon from 880,000 currently. Experts expect continued volatility as tensions are still high.
- Saudi Arabia and Iraq are sending more and more oil to Europe, more than 1 million barrels per day via a pipeline through Egypt.
- Russia has continued threats to shut of off the Caspian pipeline. This shutoff could disrupt 45 million barrels of global supply.
- The FED is expected to increase interest rates by 75 basis points this week.
- In the US Biden is looking to a different strategy to tackle climate change after Senator Manchin was the deciding vote that stopped an energy crisis from being declared.
- Baker Hughes’s rig count was unchanged last Friday.
- As of 9:29 am CST: Brent crude oil up $0.92 to $104.09, US dollar index down $0.422 to 106.309 while the nearby e-mini S&P 500 futures contract is down 4 at 3961.00.
Diesel
- Asian refiners are looking to cut back production after running all out for several months.
- Diesel is still the least bearish of the energies but is fighting declining cyclical and seasonal demand pressure.
Gasoline
- The market has moved to a more bearish tone as inventories have built over the last two weeks
- The European inventories have also increased over the last couple of weeks.
Propane
- 1.1150 Conway and Belvieu at 1.1400
- Canada will likely export less to the US by rail as a new demand source will need 30 rail cars per day.
Natural Gas
- Nordstream 1 is still flowing at 40% but Putin warned that unless a turbine is sent in that the pipeline could easily drop to 20%
- The extended forecast is still providing large support with long and widespread heatwaves through the end of August.
Prices at the Pump: The US consumer is starting to feel some relief at the pump as the national average price at the pump dipped below $4.50 per gallon. The question remains at what point does demand pick back up due to affordability.
