Outlook: Energies are pushing higher today following the trend established mid-day yesterday. Falling inflation and increasing gasoline demand have provided some macro-level optimism and helped support the market. Additionally, the dollar is seeing further declines which are favorable for commodities priced in the currency. OPEC and the IEA both released their monthly reports today with some conflicting viewpoints. OPEC is expecting an oil surplus this year while the IEA says world oil consumption is set to increase by 2%. Most notably, the IEA is forecasting a 20% decline in Russian output due to sanctions going into effect at year-end. Volatility is expected to continue as energies bounce off 6-month lows. Nearby crude may look to test resistance at $94.96 (200-day MA) by the end of the week if the trend persists.
Crude
- OPEC expects global oil markets to tip into a surplus this quarter.
- OPEC cut forecasts for the amount of crude it will need to pump in Q3 by 1.24 million bpd according to their monthly report.
- OPEC’s output in July rose by 162,000 bpd to 28.84 million bpd according to their report.
- Saudi Arabia led the group increasing output by 136,000 bpd.
- According to the IEA’s monthly report, world oil consumption will now increase by 2.1 million bpd this year or 2%.
- The IEA says Russia’s oil output is set to fall roughly 20% by the start of next year.
- US crude production increased by 100,000 bpd to 12.2 bpd and its highest level since April 2020.
- The EIA reported a 5.4 million barrel build in crude stocks for last week.
- US CPI fell to 8.5% in July.
- As of 7:57 am CST: Brent crude oil up $1.24 to $98.64, US dollar index down $0.415 to 104.781 while the nearby e-mini S&P 500 futures contract is up 35.25 to 4245.00.
Diesel
- The EIA reported a 2.1 million barrel build in diesel stocks for last week.
- Diesel inventories are 34.3 million barrels below the 5-year average
Gasoline
- The EIA reported a 4.9 million barrel build in gasoline stocks for last week.
- Gasoline inventories are 15 million barrels below the 5-year average.
- US demand rose by 6.8% to 9.1 million bpd.
- AAA reports the national average gas price at $3.99.
Propane
- Conway is trading at $1.0675 and Belvieu is trading at $1.0700.
- Conway is trading at 49% of crude.
- The US is exporting 66.7% of production as of 8/10/22.
- The EIA reported propane inventories rose by 2 million barrels last week.
- Midwest inventories fell by 40,000 barrels.
- Propane inventories are 6.4 million barrels below the 5-year average
Natural Gas
- Total US gas demand decreased to 96.9 Bcf/d yesterday.
- The EIA is expected to report a 39 Bcf injection today.
- The 5-year average injection is 45 Bcf.
- Overnight weather runs removed 2.5 CDDs from the two-week forecast.
Retail Gas: Retail gas prices have fallen below $4 a gallon for the first time since early March according to AAA. Prices have been falling for nearly 2-months with demand following suit. US gas demand saw a bump this week increasing by almost 7% which could signal the drop in prices has put consumers back on the road.
