August ULSD and RBOB futures expire Friday, July 29. Open positions need to be liquidated/rolled on Thursday, July 28, or prior.
Outlook: Energies are higher this morning ahead of the EIA report later in the morning and the FED announcement later this afternoon. Inventories are expected to fall. This could result in some bearish sentiment while a potential 75-point interest rate hike could temper some of the possible gains. Look for volatility and swings today as the market digests a lot of information.
Crude
- UK average home energy bills are soaring and will reach a new high of $603 per household.
- A Nigerian pipeline that moves 180,000 barrels per day has ceased operations due to theft. The pipeline moves 15% of Nigeria’s daily product.
- Senator Marco Rubio wants to sanction Chinese crude oil purchases to stop the country from funding Russia’s military in the Ukrainian war.
- The world’s second-largest fracker has been pulling pumps and other equipment out of mothball status and into production but fears that demand will outpace the equipment supply.
- The US is planning to start refilling its reserves after the end of the 2023 fiscal year via fixed price contracts.
- The EIA will release its inventory report this morning at 9:30 am CT. The API is predicting a 4.04 million barrel draw while Reuters is expecting a 1 million barrel draw.
- As of 8:50 am CST: Brent crude oil up $1.01 to $105.29, US dollar index down $0.192 to 106.996 while the nearby e-mini S&P 500 futures contract is up 46 at 3969.25.
Diesel
- Demand could see some increase as natural gas rises and people, especially in Europe look at the most efficient and cost-effective way to generate power.
- The API is predicting a 554,000 draw and the Reuters poll is showing a 500,000 barrel draw.
Gasoline
- Demand continues to be firmly in the driver’s seat for gasoline as consumers around the world cut back.
- The API is predicting a 900,000 barrel draw while the Reuters poll is suggesting a 1.1 million draw.
Propane
- 1.1050 Conway and Belvieu at 1.125
- OPIS’s poll average is expecting a build of 1.65 bbl
Natural Gas
- Dutch TTF prices climbed above $66 per MMBtu earlier this morning.
- Europe is expecting to pass a resolution to cut industrial natural gas use 15% to fight the shortage of supply.
- Insiders do not believe Russia will loosen its tight grip on the natural gas supply to Europe anytime soon and will continue to use it as a weapon.
Brent WTI Spread: The Brent WTI spread has widened out past $9 and continues to grow. Historically the spread has been near $2-$3
