Outlook: Energies are on track for a weekly gain but remain suppressed by macroeconomic fears. The market digested conflicted demand views between the IEA and OPEC yesterday but ultimately pushed higher. Nearby crude has tested the 200-day moving average twice but has been unable to hold its ground. Some macro optimism did return to the market this week with inflation falling and demand figures increasing. University of Michigan consumer sentiment shows the metric falling after gas prices rose past 3 dollars which could signal that further declines at the pump are necessary to reach pre-pandemic levels. The options for crude still suggest a downtrend is in place with bearish put options trading at the highest premium over bullish calls since February. Crude is currently down over 2 dollars on the day while gas and diesel are mixed with marginal movements.
Crude
- Oil is on track for its second weekly gain in two months.
- OPEC’s demand forecast revision was their third forecasted decline this year.
- OPEC’s production deficit to their target widened to 2.91 million bpd in July, according to BNEF.
- Yesterday, Shell announced the closure of six oil and gas fields within the Gulf of Mexico after discovering a leak at a Louisiana booster station pausing two pipelines.
- The Rhine River has fallen to 40 cm which is the critical level that boats can no longer pass.
- Asian buyers have purchased large volumes of cheap US oil which has raised the prospect of reduced demand for Middle Eastern crude.
- Baker Hughes will report their rig count at 12:00 CT.
- As of 9:30 am CST: Brent crude oil down $2.24 to $97.36, US dollar index up $0.614 to 105.704 while the nearby e-mini S&P 500 futures contract is up 26.25 to 4236.00.
Diesel
- AAA reports the national average retail diesel price at $5.06.
- Global airline seat capacity on planes lags pre-covid era by 14% according to OAG.
Gasoline
- ARA gasoline stocks fell by 5% this week
- AAA reports the national average retail gas price at $3.978 which has fallen for 59 consecutive days.
- A seven-day moving average of 15 Chinese cities with the highest number of cars shows congestion was about 3% higher than 2021.
Propane
- Conway is trading at $1.1000 and Belvieu is trading at $1.1000.
- Conway is trading at 49% of crude.
- The US is exporting 66.7% of production as of 8/10/22.
- Propane saw significant gains yesterday trading up over 3 cents and following crude.
Natural Gas
- Total US gas demand decreased to 96.5 Bcf/d yesterday.
- The EIA reported an injection of 44 Bcf.
- The 5-year average injection is 45 Bcf.
- Overnight weather runs added 2.5 CDDs from the two-week forecast.
OPEC+: The 19 countries participating in the OPEC+ oil supply cut deal raised their crude output by 499,000 bpd to 38.55 million bpd in July, according to BloombergNEF’s estimates. Due to their quota increase of 648,000 bpd, the group’s production deficit has increased to 2.91 million bpd in July, up from 2.76 million bpd in June.
