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Outlook: Energies are finding strength across the board today finding strength from reports of Russian crude flows being halted due to sanctions preventing payments. Global supply remains tight and news of any supply disruption involving Russia can be a significant market mover. If an effort to support supply, the EU has introduced the final draft of the Iran nuclear deal. The EU said a final decision that requires the US and Iran’s approval is expected within “very, very few weeks”. Iran’s crude exports sit around 1 million bpd below their rate in 2018 when former President Trump exited the nuclear agreement. The market is scheduled for a full slate tomorrow including a release of CPI data which measures inflation along with the weekly EIA inventory report. The API will release its inventory this afternoon at 3:30 CT.
Crude
- Russian oil shipped along the Druzhba pipeline toward Hungary, the Czech Republic, and Slovakia was halted due to sanctions preventing Russia’s transit payment.
- Shipments of Russian crude to ports in Italy and Turkey rose to multi-week highs last week.
- The US and Iran have a few weeks to sign the final draft of the nuclear deal after negotiators wrapped up 15 months of talks in Vienna on Monday.
- The climate and tax bill passed by the Senate would force oil companies to pay more for drilling on federal land and block them from stockpiling leases at rock-bottom prices.
- WTI’s 50-day moving average crossed beneath its 100-day moving average for the first time since February.
- The 3-2-1 crack closed at its softest level since April 7th yesterday at $34.56.
- The API will report their inventory survey at 3:30 CT.
- Reuters is estimating a 400,000 barrel draw in crude inventories last week.
- As of 8:17 am CST: Brent crude oil up $0.94 to $93.59, US dollar index down $0.385 to 106.050 while the nearby e-mini S&P 500 futures contract is down 10.25 to 4131.00.
Diesel
- Reuters is estimating diesel inventories were unchanged last week.
- Goldman Sachs estimates retail diesel prices will return to $5.50 by the 4th quarter of this year.
- The Nymex heating oil crack hit its lowest level since May yesterday at $42.45
Gasoline
- Reuters is estimating gasoline inventories fell by 400,000 barrels last week.
- GasBuddy reported sales from 150,000 stations saw consumer demand hit a year-to-date high in the week ending on July 24.
- According to OPIS, gas stations are selling around 8-9% less gasoline than they did in July 2021.
Propane
- Conway is trading at $1.0650 off 3 cents and Belvieu is trading at $1.070 off 3.5 cents.
- Conway is trading at 51% of crude.
- The US is exporting 62% of production as of 8/3/22.
Natural Gas
- Total US gas demand increased to 96.0 Bcf/d yesterday.
- US regulators will allow Freeport LNG to resume partial operations in October.
- Reuters estimates an injection between 30-40 Bcf last week
- Overnight weather runs removed 3 CDDs from the two-week forecast.
Tanker Rates: Tankers hauling fuels including diesel and gasoline are seeing a period of strength not seen in roughly 25 years. Robust demand and stretched sailing distances due to the war have allowed for increased profits. Product tankers have been earning more than $40,000 a day over the last two weeks according to Clarkson Research Service.
