Outlook: Energies are higher across the board this morning as crude attempts to push back above $100. Both August product contracts are set to expire today and are seeing considerable gains. RBOB is leading the group this morning up over 5% as demand returned to seasonal norms in reaction to dropping pump prices. Brent crude is trading over $110 and a significant premium to WTI due to a tighter supply situation overseas. OPEC+ is scheduled to meet next week on August 3rd and reports were circulating yesterday the group may consider keeping output unchanged for September. Members of the group have expressed concerned that refining capacity is unable to keep pace with growing crude production. While natural gas values have surged over the last week, propane prices have remained surprised. Propane inventories have seen builds, but overall, Midwest inventories still sit below 5-year averages. Current prices present a good opportunity to layer in contracts for fall and winter usage.
Crude
- Yesterday, Reuters reported that sources said that OPEC+ will consider keeping oil output unchanged for September during next week’s meeting.
- OPEC+ compliance surged to 313% in June.
- Russia and Saudi Arabia reaffirmed their commitment to the OPEC+ agreement and a stable oil market after a meeting between Prime Minister Novak and Energy Minister Abdulaziz bin Salman.
- Exxon Mobil posted its best-ever profit in Q2 netting 17.9 billion and passing the previous record set in 2008.
- Global refinery outages were at 1.08 million bpd as of July 28th. Outages in the US were 464,000 bpd.
- The Brent/WTI prompt spread has pushed to its highest level since May 2019 at $11.25.
- Baker Hughes will report their rig count at 12:00 CST.
- As of 8:53 am CST: Brent crude oil up $2.78 to $109.92, US dollar index up $0.223 to 106.574 while the nearby e-mini S&P 500 futures contract is up 30.25 to 4104.00.
Diesel
- AAA reports the national average retail diesel price at $5.139.
- The August diesel contract is set to expire today.
Gasoline
- The spot market price for space on the Colonial Pipeline is 7.125 cents a gallon for a 25,000 barrel batch, the highest since November 2016.
- AAA reports the national average retail gas price at $4.255.
- The August RBOB contract is set to expire today.
Propane
- Conway is trading at $1.115 and Belvieu is trading at $1.1475.
- Conway is trading at 46% of crude.
- The US is exporting 64% of production as of 7/13.
Natural Gas
- Total US gas demand was flat at 95.8 Bcf/d yesterday.
- The EIA reported a smaller than expected injection of 15 Bcf yesterday.
- Inventories are 12.5% below the 5-year average.
- The 5-year average build is 32 Bcf for this time period.
- Overnight weather runs added 0 CDDs to the two-week forecast.
Crude Exports: US crude exports are set to climb to a record 5 million bpd in the coming months. Port limits and a slow pace of production growth will likely yield a short life span for maintaining the record pace. Shipments last week were pushed to 4.6 million bpd.
