Outlook: Energies are finding strength across the board this morning. Supportive inventory data along with the possibility of OPEC+ cutting production has given strength to the market. The nuclear deal still looms after the US responded to the EU’s proposal however if a deal is struck, it could further incentivize OPEC to drop production to counter the supply increase. Macro markets are also providing support with equities and metals moving higher while the dollar moves lower. Further macro influence will likely be found tomorrow when the Fed holds its Jackson Hole symposium. Fed Chair Jerome Powell will speak on the economic outlook at 10 a.m. Washington time and is expected to re-state the Fed’s resolve to keep raising interest rates.
Crude
- OPEC’s rotating president said he is open to cutting production.
- If the US and Iran come to an agreement, OPEC+ may find further incentive to cut production due to additional barrels from Iran.
- Nearby crude is testing its 200-day moving average at $95.40
- US crude production fell by 100,000 bpd to 12 million bpd.
- Total US crude and product exports last week posted a fresh record reading above 11 million bpd.
- The EIA reported a 3.3 million barrel draw in crude stocks last week.
- Crude inventories are 24.6 million barrels below the 5-year average.
- The US Federal Reserve’s Jackson Hole symposium will take place on Friday and may provide an outlook on interest rates and the health of the economy.
- As of 8:38 am CST: Brent crude oil up $1.17 to $102.39, US dollar index down $0.118 to 108.559 while the nearby e-mini S&P 500 futures contract is up 9.25 to 4151.00.
Diesel
- The EIA reported a 662,000 barrel draw in diesel stocks last week.
- Diesel inventories sit 34.9 million barrels below the 5-year average.
- Diesel’s premium over gasoline is trading at its highest level since the squeeze at the end of April.
Gasoline
- The EIA reported a 27,000 barrel draw in gasoline stocks last week.
- US gasoline demand fell nearly 10% last week.
- Gasoline inventories are 16.3 million barrels below the 5-year average.
- California announced they plan to ban the sale of gas-powered cars by 2035.
Propane
- Conway is trading at $1.1350 and Belvieu is trading at $1.1375.
- Conway is trading at 50% of crude.
- The US is exporting 71% of production as of 8/19/22.
- The EIA reported a 9,000 barrel build in propane stocks last week.
- The Midwest saw a build of 174,000 barrels.
Natural Gas
- Total US gas demand increased to 93.6 Bcf/d yesterday.
- Total dry production increased to 95.1 Bcf/d.
- Overnight weather runs were unchanged.
- The EIA is expected to report an injection of 51 Bcf.
- The 5-year average injection is 46 Bcf.
Petroleum Exports: US shipments of crude and refined products have pushed to a fresh record and surpassed 11 million bpd. Crude saw a decline in exports but still remains elevated compared to the average while diesel exports surged by 20%. Europe is racing to bring in as much product as possible before the Russian import ban takes effect at the end of the year.
