Outlook: Energies are trading sharply lower this morning as new Chinses economic data shows that the largest consumer in the world is importing less crude oil and diesel than they have in over 2 years. The rest of the market was forced down by the news. Diesel continues to be the strongest leg of the market with ever-tightening inventories, particularly in the Midwest. This week’s schedule will see API estimates Tuesday Afternoon at 3:30 PM CT, Wednesday we will have the new EIA stats at 9:30 am CT.
Crude
- Chinese economic data was poorer than expected, and interest rate decreases have pushed the market lower to start the week.
- Chinese oil demand last month was 10% lower year over year and their lowest imports since spring of 2020.
- Russia continues to find homes for its oil and products despite heavy sanctions across the globe. Experts say that the impending EU ban could prove to be too much of an obstacle to Russian exporters.
- Low water levels have led to several nuclear power plant shutdowns in France. Germany is also seeing the Rhine River
- A potential Iran Nuclear Deal is still waiting in the wings as Iran said it plans to counter a US proposal.
- The repairs were made to the pipelines in the Gulf of Mexico and operations have resumed.
- As of 8:59 am CST: Brent crude oil is down $4.06 to $93.95, the US dollar index up $0.625 to 106.257 while the nearby e-mini S&P 500 futures contract is down 12 at 4269.00.
Diesel
- Diesel imports into Europe from Russia have been significantly reduced. This is providing strength to the global market.
- The drought in Europe has dropped the levels of the Rhine River making it challenging to import enough diesel into Germany and surrounding countries.
- The Net longs grew last week by 2100 contracts
Gasoline
- Gas prices at the pump on a national average at the pump are down $1.10 since their highs back in late June and are below $4.
- Demand jumped back above the 9 million barrel per day mark as consumers take back to the roads.
- Net longs shrunk by 3000 contracts last week.
Propane
- 1.0600 Conway and Belvieu at 1.0700
- Propane continues to fall along with the other energy products. Week over week the market is nearly even despite crude losing significantly more ground.
Natural Gas
- Dutch TTF is currently at $63
- Russian-owned Gazprom once again failed to increase flows through the Nordstream pipeline.
- Domestic Henry Hub futures are lower after the forecast removed 4 CDD’s
Nat Gas VS Crude: As Natural gas prices soar overseas Henry Hub futures have bounced higher as well. This surge makes more oil-based products more financially feasible where regulations allow it. This could have the potential to lower nat gas demand and provide a bump in oil demand.
