Morning Highlights
Morning Highlights

8-19 Energy Complex Bounces Around to End the Week


Michael Dix

Aug 19, 2022

Outlook: Energies are bouncing around this morning and are looking for direction after yesterday’s rally. Tight inventories are still wrestling with potentially poor demand. ULSD is the strong contract and is slightly higher. Crude is lower while RBOB leads the way down after being the leader higher the prior session. Natural gas is trading in a very large range again today and is seeing extreme volatility.

Crude

  • The UK is set to allow utility companies to set a new price based on the market in October and estimates show that the average household will have a 3,600-pound energy bill each year.
  • Barring a big move higher today oil is set for yet another weekly loss.
  • The Rhine River is expected to rise and allow for more free-flowing mobility.
  • Europe is burning more “dirty” fuels this year and has caused their pollution footprint to potentially grow which has many politicians concerned about the effects to the environment.
  • Older tanker ships are coming back due to high premiums to haul Russian crude.
  • Chinese crude buyers at refineries may look to build stocks back up ahead of increased demand.
  • Baker-Hughes rig count will come out today at Noon CT
  • As of 9:06 am CST: Brent crude oil is down $0.36 to $96.25, the US dollar index up $0.482 to 107.960 while the nearby e-mini S&P 500 futures contract is down 42 at 4244.00.

Diesel

  • Tight diesel inventories ahead of fall demand have pushed ULSD futures to 3-week highs
  • The low levels on the Rhine River have led to the slowing of Germany’s largest refinery.

Gasoline

  • Gas was the strongest member of the energy complex yesterday and is leading the way lower this morning.
  • Chinese exports were 19% higher than they were a year ago for the month of July

Propane

  • 1.0850 Conway and Belvieu at 1.0925
  • Propane inventories are below the five-year average, but well above the low levels seen last year.
  • 48% of production is currently being exported.

Natural Gas

  • Dutch TTF is currently at $72
  • A Western Canadian LNG hub went to -42 cents per mmbtu. This is the lowest price seen in the last three years
  • Mozambique is set to export its first LNG tanker as global costs soar.

Profitable Tankers: Tanker companies hauling Russian crude should see strong profits this year even as rates have fallen recently. The financial incentive has helped get Russian barrels out of ports that they may have otherwise been stuck in.


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