Morning Highlights
Morning Highlights

8-3 Market Slides Off Gains After OPEC and Ahead of EIA


Michael Dix

Aug 3, 2022

 

Outlook: Energies were higher this morning as OPEC met and discussed a potential 100,000 barrel per day production increase. Since the market has opened crude has come off of those early gains to track more closely to even on the day. Diesel is finding strength in potential demand increases along with possible draws in this morning’s EIA report. Internationally Europe has yet to discover a solution to its energy crisis and India cut its manufacturing industry’s allowance of natural gas by 10% in an effort to decrease demand and therefore prices for consumers.

Crude

  • OPEC+ agreed to a small 100,000  barrel per day production increase.
  • China conducted military exercises shortly after Speaker Pelosi landed in Taiwan yesterday. China also tacked on new trade regulations against Taiwan.
  • Water levels on the Rhine River are dangerously low and could lead to the shutdown of the river stranding and restricting massive trade volumes in Germany.
  • Chesapeake Energy plans to exit the Eagle Ford Shale production area as it moves to a more natural gas-focused model.
  • Vitol, the world’s largest independent oil trader posted a 4.2 billion dollar profit last year according to their recently released end-of-year financial statement.
  • The EIA will release its report at 9:30 am CT.
  • Reuters poll is predicting a 500,000 barrel draw, while The API is predicting a 2.17 million barrel build.
  • As of 9:14 am CST: Brent crude oil is up $0.17 to $100.75, the US dollar index up $0.090 to 106.322 while the nearby e-mini S&P 500 futures contract is up 28 at 4122.50.

Diesel

  • Retail prices have moved lower this week similar to gasoline. Demand could see a slight jump. There are talks about switching natural gas-powered facilities in Europe to more fuel oil options
  • Reuters poll is predicting a 900,000 barrel draw and the API is predicting a 351,000 barrel draw.

Gasoline

Propane

  • 1.1150 Conway and Belvieu at 1.1300
  • Inventories are expected to rise 1.84 mmb according to an OPIS poll

Natural Gas

  • France which produces the largest amount of nuclear energy in Europe says that it is likely to cut production further.
  • The forecast added 6 CDDs
  • Hot weather across the plains and Midwest have increased demand, but that increase is somewhat tempered by cooler temps in the south.

Libya’s Production: Libya has struggled to produce its quota or even maintain its production level due to political protests as well as other related shutdowns. Libya should be producing nearly 1 million barrels per day to stay in compliance with OPEC+’s production quota.