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Outlook: Energies are mixed this morning as traders wait for the OPEC+ meeting and EIA data to be released tomorrow. OPEC continues to fall short of its production targets. The group pumped 28.98 million bpd last month, after producing 60% of their quota for July. Their scheduled cuts are set to end in August which has brought more attention to their decision for September. The US took action against companies who have helped haul Iranian products prohibited by US sanctions yesterday. The sanctions are aimed to pressure the ongoing nuclear deal talks between nations which have yielded little progress. Energies have dipped into a downward trend with Ed Morse, head of commodity research at Citigroup, calling for crude to be in the mid-80s by the end of the year. The prompt crude contract traded below the 200-day moving average for the first time since December with soft global economic data bringing significant bearish pressure to commodities.
Crude
- US House Speaker Nancy Pelosi is expected to land in Taiwan on Tuesday evening in defiance of Chinese threats.
- OPEC pumped 310,000 additional bpd in July delivering 60% of their target growth for the month.
- Reuters says another output hike for September is not likely.
- OPEC+ is scheduled to meet tomorrow to discuss further production options.
- Yesterday, the US imposed sanctions on Chinese and other firms that helped sell Iranian oil and petrochemicals to East Asia.
- Iran nuclear deal talks are set to resume this week with EU officials pushing for a quick deal.
- Ed Morse of Citigroup says crude will drift downward in the months of 2023.
- Prompt crude closed below the 200-day moving average yesterday at $94.70
- The API will report their inventory survey at 3:30 CST.
- Reuters estimates crude inventories fell by 500,000 barrels last week.
- As of 8:24 am CST: Brent crude oil up $0.29 to $100.32, US dollar index up $0.112 to 105.562 while the nearby e-mini S&P 500 futures contract is down 19.25 to 4101.00.
Diesel
- Ed Morse of Citigroup said China’s shutdowns of international travel have reduced jet fuel demand by 1 million bpd.
- Reuters estimates diesel inventories rose by 900,000 barrels last week.
Gasoline
- Nearby RBOB futures have pushed below $3.00 for the first time since March.
- Reuters estimates gasoline inventories fell by 1.6 million barrels last week.
Propane
- Conway is trading at $1.10 and Belvieu is trading at $1.1225.
- Conway is trading at 49% of crude.
- The US is exporting 60.8% of production as of 7/27.
Natural Gas
- Total US gas demand increased by 1.5 Bcf to 94.8 Bcf/d yesterday.
- US exports of LNG fell for the second consecutive month in July.
- Overnight weather runs removed 2 CDDs from the two-week forecast.
Russian Exports: Russian seaborne crude shipments have stabilized around 500,000 bpd below the peak they reached after the invasion. Outflows hit a four-week high of 3.5 million bpd according to Bloomberg data. Four-week average shipments were at 3.2 million bpd.
