Outlook: Markets are looking for direction this morning ahead of the Fed meeting. The Jackson Hole symposium is set to take place with Jerome Powell speaking around 9:00 CT this morning. The meeting will aim to provide clarity on the direction of interest rates and the health of the economy. Fundamentals found support yesterday from a fire at the Midwest’s largest refinery. BP’s PLC shut in two crude units with no timetable for a return to processing. The Chicago basis market saw a significant uptick in both gasoline and diesel following the headline yesterday. Global headlines are mixed this morning with Chinese data reflecting roughly a 7% decline in oil demand in July while Chinese-bound cargos rose to a four-month high. Elevated natural gas prices have brought in additional speculation on the effect on the oil market. Switching away from natural gas power across Europe could increase oil demand by 650,000 bpd according to FGE. Expect volatility to continue with WTI open interest at its lowest level since January 2015.
Crude
- Yesterday, BP PLC shut in two crude units at its refinery in Whiting Indiana due to a fire. The refinery is the largest in the Midwest and produces 435,000 bpd of fuel.
- China’s apparent oil demand fell by 7% in July according to government data.
- Chinese bound oil flows rose to a four-month high.
- Facts Global Energy believes switching from natural gas will boost oil demand by 650,000 bpd this winter.
- WTI open interest has fallen to its lowest level since January 2015.
- 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.
- Michigan Consumer Sentiment will be released at 9:00 CT.
- Baker Hughes will report their rig count at 12:00 CT.
- As of 7:56 am CST: Brent crude oil up $0.36 to $99.70, US dollar index down $0.275 to 108.195 while the nearby e-mini S&P 500 futures contract is down 4.25 to 4197.00.
Diesel
- China’s diesel demand fell 4% month-over-month in July according to government data.
- Nearby diesel is trading on its upper Bollinger band which could signal the market is overbought.
- Diesel stocks at the ARA hub are near their lowest levels since 2014.
Gasoline
- Amsterdam-Rotterdam-Antwerp (ARA) gasoline stocks rose by 11% and to record highs in the week to Thursday.
- Chicago basis saw a significant bump yesterday following the outage in Whiting Indiana. Chicago gas basis rose by 21 cents yesterday.
Propane
- Conway is trading at $1.1225 and Belvieu is trading at $1.1250.
- Conway is trading at 50% of crude.
- The US is exporting 71% of production as of 8/19/22.
Natural Gas
- Total US gas demand increased to 95.9 Bcf/d yesterday.
- Total dry production increased to 95.9 Bcf/d.
- Overnight weather runs added 1 CDD to the two-week forecast.
- The EIA reported a larger than expected injection of 60 Bcf.
- The 5-year average injection is 46 Bcf.
Refinery Outages: Global refinery outages were at 858,000 bpd as of August 24th compared to 1.04 million a week earlier. Total US outages were at 136,000 bpd and total Russian outages were at 67,000 bpd. The projected decline could be interrupted in next week’s data due to the Whiting outages reported yesterday.
