Outlook: Energies are mixed to start the day as they look for direction following yesterday's significant selloff. Crude set fresh six-month lows following soft economic data across the globe. The EIA is forecasting US shale oil basins to reach their highest output since March 2020 next month and the Permian Basis output is expected to reach a record high. The US will continue to look to replace the supply coming from the SPR which is scheduled to end by the end of October. US production likely won’t be able to pick up the slack despite its growth, however, an agreement on the Iran Nuclear would be the ideal candidate. An agreement would allow Iran to add 1 million bpd of production which the US would look to for additional imports. Domestic fundamentals will return to focus tomorrow when the EIA releases its inventory data. Demand showed signs of recovery last week which helped boost overall economic sentiment and will likely be in the spotlight again this week.
Crude
- Today Iran confirmed the country submitted a written response to the final proposal for the nuclear deal.
- Iran’s news station reported differences on three issues, and the US expressed flexibility on two items, while the third relates to guaranteeing the continuation of the agreement.
- China’s oil demand may average around 14.1 million bpd this quarter, below the average of 15.7 million bpd in the same period last year according to Kpler data.
- According to the EIA’s drilling productivity report released yesterday, the US is forecast to increase oil production by 141,000 bpd between August and September.
- Permian Basin output is forecast to grow 1.5% in September, down from 1.6% in August according to EIA data.
- US waterborne crude imports fell by 111,900 bpd to 2.6 million bpd in the week ended Aug 12th according to Bloomberg AHOY data.
- BP is seeking to get rid of its oil assets in Mexico amid a shift in its business strategy toward renewable energy.
- WTI pushed to fresh six months lows yesterday.
- Reuters estimates crude stocks fell by 100,000 barrels last week.
- The API will report its inventory survey today at 3:30 CT.
- As of 8:40 am CST: Brent crude oil down $0.79 to $94.31, US dollar index up $0.122 to 106.668 while the nearby e-mini S&P 500 futures contract is down 6.25 to 4292.00.
Diesel
- Waterborne diesel imports fell by 18,500 bpd last week according to Bloomberg AHOY data.
- Reuters estimates diesel stocks increased by 1.1 million barrels last week.
Gasoline
- Waterborne gasoline imports fell by 113,900 bpd last week according to Bloomberg AHOY data.
- Reuters estimates gasoline stocks fell by 1.5 million barrels last week.
Propane
- Conway is trading at $1.0700 and Belvieu is trading at $1.0750.
- Conway is trading at 50% of crude.
- The US is exporting 66.7% of production as of 8/10/22.
Natural Gas
- Total US gas demand increased to 90.4 Bcf/d yesterday.
- US dry production is expected to be lower today at 94.6 Bcf/d, down from 95 Bcf/d.
- The EIA’s DPR for August forecast US gas production will increase by 673 mmcf/d between August and September.
- Overnight weather runs were unchanged for the two-week forecast.
Chinese Demand: Chinese oil demand continues to see the threat of decline following aggressive curbs to combat covid outbreaks. Oil demand is projected to be around 1.6 million bpd lower this quarter than the same time period last year. Official figures show crude consumption sank almost 10% in July as refineries handled the least oil on a daily basis that month since March 2020.
