Morning Highlights
Morning Highlights

8-24 Markets Bouncing Following EIA


Michael Dix

Aug 24, 2022

 

Outlook: Energies have bounced around this morning and are mixed currently. Crude and diesel are higher following draws in the EIA report. Natural gas has rebounded today on higher European prices and flooding in the Dallas Metro Area. Overall tight inventories are still gripping the market and providing some support. Gasoline demand being lower is not a great sign for the economy and could act as a leash for the ULSD and WTI markets.

Crude

  • European governments have pumped 280 billion dollars into the economy to curb energy costs.
  • Rolling blackouts continue to plague urban areas across the world.
  •  Russian exports to Asia are picking up as the EU tightens its import policy and further restricts imports from Russia.
  • World powers from India to Japan and all the way to Great Britain are looking to resurrect their Nuclear Power industries to fill the void of the energy crisis.
  • Chinese droughts leading to lower hydro output continue to support demand.
  • OPEC+ has not backed down from its position that if Iran increases production OPEC may cut its production goals.
  • The EIA showed a 3.3 million barrel draw in inventories.
  • As of 10:06 am CST: Brent crude oil is down $3.44 to $93.29, the US dollar index up $0.644 to 108.799 while the nearby e-mini S&P 500 futures contract is down 72 at 4159.50.

Diesel

  • Tight inventories and smaller than expected builds continue to support the ULSD contract.
  • Refinery runs fell by 168,000 last week and utilization of refineries was higher.
  • The EIA showed a 661,000 barrel draw in diesel inventories.

Gasoline

  • Us prices at the pump inched higher for the first time in two months.
  • Implied demand fell significantly in this weeks EIA report.
  • The EIA showed a 27,000 barrel draw this week in gasoline inventories.

Propane

  • 1.1350 Conway and Belvieu at 1.1375
  • The market has inched higher after the EIA report and as crude rallied.

Natural Gas

  • Dutch TTF has climbed back above the $80 mark as supplies from Nordstream are still at zero while maintenance is being done.
  • Israel plans to boost exports by 22% mostly to Europe.

Propane Exports: Propane exports hit a record high last week as inventories creep ever closer to the five-year low. This could see propane finding strength vs crude. The propane has disconnected from Natural gas and has been much closer related to WTI crude. Historically propane and nat gas have been similar in their trends up until recently.