Outlook: Energies are off their lows this morning after crude pushed into the $85 range. The markets are weighing recessionary threats following China’s comments stating they would take steps to boost a flagging economy. Additional downside pressure is coming from the developing Iran nuclear deal. The Biden administration is currently weighing Iran’s response to the EU final proposal, and officials on both sides remain optimistic a deal could emerge. Goldman Sachs expressed doubt regarding the deal coming to fruition and also stated new barrels wouldn’t hit the market till next year if it did. The EIA will release inventories this morning at 9:30 CT. The API survey showed draws across the board while Reuters estimates predict a similar outcome.
Crude
- Yesterday, President Biden signed the US Inflation Reduction Act, which entails $370 billion in energy security and climate change spending over the next decade.
- China’s Premier Li Keqiang has urged more pro-growth measures to boost their flagging economy.
- OPEC’s Secretary General Haitham Al Ghais cautioned high risks concerning a supply squeeze through 2022 amid strong global demand coupled with reduced spare capacity.
- Goldman Sachs believes a deal between the US and Iran is unlikely to be struck in the near term, and if it was, oil wouldn’t flow until next year.
- Crude exports out of the UAE are set to grow with the Fujairah offshore terminals ready to resume loading after being down for two weeks due to heavy rain and flooding.
- The API survey showed a 400,000 barrel draw in crude stocks for last week.
- Reuters estimates crude stocks fell by 100,000 barrels last week.
- The EIA will report their inventory survey at 9:30 CT.
- As of 8:40 am CST: Brent crude oil up $0.15 to $92.49, US dollar index up $0.218 to 106.718 while the nearby e-mini S&P 500 futures contract is down 37.25 to 4270.00.
Diesel
- The API survey showed an 800,000 barrel draw for diesel stocks last week.
- Reuters estimates diesel stocks increased by 1.1 million barrels last week.
- The API survey showed a 4.5 million barrel draw for gasoline stocks last week.
- Reuters estimates gasoline stocks fell by 1.5 million barrels last week.
Propane
- Conway is trading at $1.0525 and Belvieu is trading at $1.0650.
- Conway is trading at 51% of crude.
- The US is exporting 66.7% of production as of 8/10/22.
- Propane stocks are expected to increase by 1.8 million barrels in the EIA report.
Natural Gas
- Total US gas demand decreased to 91.7 Bcf/d yesterday.
- Total dry production decreased to 94.6 Bcf/d.
- Germany has reached an intermediate refill target two weeks ahead of schedule and believes they would have two and a half months of supply if Russia completely cut gas flows.
- Overnight weather runs were unchanged for the two-week forecast.
Iran Oil: When sanctions were eased following the 2015 nuclear deal, Iran’s crude output increased by a larger margin than analysts had predicted. Iran’s infrastructure is expected to be in good condition, there is speculation that a similar outcome could be seen if a deal is struck. The Persian Gulf nation also has an estimated 100 million barrels of crude and condensate in storage that could be released immediately.
