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Outlook: Energies are looking for direction after rebounding off their lows early this morning. Reports that Russian oil flows are set to resume through the Druzhba pipeline sent markets lower to start the day with crude trading down over a dollar. Energies have since found a boost on a softening US dollar which is down over 1300 points following a less than expected CPI inflation number. US inflation continues to be a significant market mover with the Fed aggressively hiking interest rates to corral the economy. A bullish boost from the CPI could be paired with a bullish EIA report if we see a rebound in demand data this morning. Gas prices have been falling for nearly two months which may allow consumers to return to their seasonal driving habits during the final month of summer. Crude is trading near even while products remain mixed following the flow of early headlines.
Crude
- Russian oil shipped along the Druzhba pipeline toward Hungary, the Czech Republic, and Slovakia is set to resume flows.
- The Rhine River is set to become impassable at a key waypoint in Germany as shallow water chokes off shipments of energy products and other commodities.
- US annual CPI inflation declined to 8.5% vs 8.7% expected.
- Crude inventories in ARA facilities declined by 3.7% relative to last week.
- The EIA lowered their US oil output growth forecast for 2023 from 860k bpd to 840k bpd.
- The API survey showed a 2.2 million barrel build in crude inventories for last week.
- Reuters is estimating a 400,000 barrel draw in crude inventories last week.]
- The EIA will release its inventory report at 9:30 CT
- As of 7:57 am CST: Brent crude oil up $0.03 to $96.34, US dollar index down $1.349 to 105.025 while the nearby e-mini S&P 500 futures contract is up 70.25 to 4194.00.
Diesel
- Reuters is estimating diesel inventories fell by 667,000 barrels last week.
- The API survey showed diesel inventories rose by 1.4 million barrels last week.
- NW Europe is forecast to begin winter with historically low amounts of diesel which powers a large portion of their economy. Stockpiles are forecast to be at their lowest levels since 2011.
Gasoline
- Reuters is estimating gasoline inventories fell by 400,000 barrels last week.
- The API survey showed gasoline inventories fell by 627,000 barrels last week.
Propane
- Conway is trading at $1.0575 and Belvieu is trading at $1.0600.
- Conway is trading at 49% of crude.
- The US is exporting 62% of production as of 8/3/22.
- US propane inventories are expected to build by 1.97 million barrels last week.
Natural Gas
- Total US gas demand decreased to 97.2 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 5 CDDs from the two-week forecast.
Rhine River: The Rhine is set to become impassable this week which could disrupt up to $80 billion in trade. The river is forecast to drop to the critical depth of 40 cm early on Aug 12, falling to 38 cm later in the day. At that level, barges are effectively unable to transit the river.
