Outlook: Energies are looking for direction this morning with crude seeing strength while products lag behind lower. Saudi Arabia’s comments around OPEC+ and possible supply cuts due to the current market conditions will likely weigh on the market until their next meeting. Spare capacity and supply disruptions will continue to be a topic of discussion with the recent damage to the CPC pipeline being a prime example of the fragility of some of the current infrastructure. Macro concerns found headlines again today with Euro-area economic activity declining for the second straight month amidst record inflation. Reuters poll suggests crude inventories fell by 1.5 million barrels last week. This draw alongside a large SPR draw of over 8 million barrels could indicate exports will remain strong after posting record levels in the last EIA report. The API will report their survey at 3:30 CT.
Crude
- Saudi Arabia suggested OPEC+ may cut oil output due to futures prices not accurately reflecting market fundamentals.
- On Monday, a US official told Reuters that Iran had dropped some of its main demands on resurrecting the nuclear deal.
- The Rhine River has returned to levels at which cargoes carrying 35-40% capacity can pass.
- The CPC may delay tanker loadings to inspect if their third mooring for loading of the Kazakh crude stream at Russia’s Black Sea terminal has the same damage as the other two.
- European economic data showed Euro-area economic activity declined for the second consecutive month due to record inflation.
- Waterborne crude shipments to the US fell by more than 400,000 bpd to 2.4 million bpd last week according to Bloomberg data.
- The US SPR saw a draw of 8.1 million barrels last week.
- Reuters is estimating crude inventories fell by 1.5 million barrels last week.
- The API will report their inventory survey at 3:30 CT.
- As of 7:53 am CST: Brent crude oil up $0.84 to $97.32, US dollar index up $0.001 to 109.047 while the nearby e-mini S&P 500 futures contract is down 2.25 to 4231.00.
Diesel
- The diesel crack spread is at its highest level seasonally since 1986 at $67.54.
- Reuters is estimating diesel inventories rose by 300,000 barrels last week.
Gasoline
- Gasoline prices have fallen for 70 straight days, the longest streak since January 2015. Pump prices are averaging $3.892 per gallon according to AAA.
- Reuters is estimating gasoline inventories fell by 1.8 million barrels last week.
Propane
- Conway is trading at $1.1000 and Belvieu is trading at $1.1037.
- Conway is trading at 51% of crude.
- The US is exporting 48% of production as of 8/12/22.
Natural Gas
- Total US gas demand increased to 89.7 Bcf/d yesterday.
- Total dry production increased to 96.0 Bcf/d.
- Overnight weather runs added 6 CDD’s to the two-week forecast.
- Natural gas continues to test $10 in Nov-Jan contracts.
New York Gasoline: Gasoline inventories on the east coast have continued to fall. Suppliers are willing to pay abnormally high rates for US vessels to move fuel into the region to avoid shortages. Two vessels are en route to deliver fuel from Texas and Louisiana to New York by the end of the week, according to Bloomberg vessel tracking.
