Outlook: Energies are moving higher this morning with supply concerns still holding control of the market. Natural gas is the headliner today with a dollar range and new contract highs in the nearby which is set to expire tomorrow. Russia has tightened its gas squeeze on Europe by reducing gas flows through Nord Stream 1 to just 20% this week. The cut leaves countries unable to refill storage ahead of winter where a severe heating crisis is at risk. Crude and products are also seeing healthy gains this morning bouncing off recent lows seen last week. August RBOB and ULSD contracts are set to expire this week and the upside in the market to start the week presents a good opportunity to unwind any long positions still in place. Reuters is calling for draws in RBOB and WTI inventories last week and a build in Diesel. The API will report its inventory survey at 3:30 CST.
Crude
- Libya has boosted oil production to more than 1 million bpd this week.
- According to Bloomberg, Russian crude exports have decreased for five consecutive weeks, down by 480,000 bpd since mid-June.
- US waterborne crude imports fell by 193,000 bpd to 2.76 million bpd last week according to Bloomberg data.
- Industry consultant FGE says global refining capacity outside of China will only return to 2019 levels by 2024.
- Morgan Stanley lowered their forecast for Brent and WTI by $10-20/bbl through mid-2023 amid reduced oil demand projections.
- Brent crude is trading at its highest premium to WTI in 3 years topping out at $8.93
- The Fed is expected to hike interest rates by 75 bps tomorrow.
- Reuters is estimating a 1.1 million barrel draw in crude inventories last week.
- The US SPR fell by 5.6 million barrels last week to its lowest level since 1985.
- The API will report their inventory survey at 3:30 CST.
- As of 8:19 am CST: Brent crude oil up $1.60 to $106.75, US dollar index up $0.532 to 107.015 while the nearby e-mini S&P 500 futures contract is down 21.25 to 3949.00.
Diesel
- Reuters is estimating a 500,000 barrel build in diesel inventories last week.
- In the week to July 26th, global jet fuel demand from commercial passenger flights fell by 0.04% week-over-week.
- US passenger throughput is at 87.9% of the equivalent week in 2019.
Gasoline
- Reuters is estimating a 1.1 million barrel draw in gasoline inventories last week.
- According to a AAA survey, out of 1,002 US adults last month, 64% adapted their driving or lifestyle habits in response to high fuel prices.
Propane
- Conway is trading at $1.12 and Belvieu is trading at $1.1375.
- 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 1.6 Bcf/d to 96.9 Bcf/d yesterday.
- Nearby natural gas is pushing to new contract highs this morning.
- Russia has tightened the supply moving through Nord Stream 1 to 20% of capacity.
- Overnight weather runs added 2 CDDs to the two-week forecast.
- US power burn for July is up 6.4 Bcf/d MTD.
- The EU agreed to cut their natural gas use b 15% through next winter.
Continuous NG: Nearby natural gas has pushed to new contract highs following reports of Nord Stream 1 flows being cut to 20% and widespread heat waves heading for the US in August. The August contract pushed to a high of $9.752 this morning before pulling back and is scheduled to expire tomorrow.
