Outlook: Energies are bouncing higher this morning with the exception being diesel. Yesterday saw the market move lower after the CPI data that was higher than anticipated. The FED is rumored to be weighing a full percentage point increase in interest rates next week to combat the increasing inflationary issues. The market bounced back when the White House hinted that they may be buyers of crude at $80 per barrel to refill the ever-shrinking SPR. The EIA will release its inventory report this morning at 9:30 AM CT.
Crude
- The IEA trimmed its estimates for global demand due to economic downturns as well as energy cuts in certain places like China and Europe.
- The Biden Administration announced that they may look to fill the SPR at $80 per barrel. This has almost set a temporary floor for crude oil in the meantime.
- The EU is still working on finding more ways to reduce energy consumption by major corporations and manufacturing facilities.
- IEA sees the largest annual drop in Chinese oil demand in the last 30 years for this year. Consumption is down 420,000 barrels per day or 2.7% of the country’s demand.
- Commodity market experts are growing more and more concerned about the shrinking liquidity in the market as poor liquidity allows for further volatility. Brent’s open interest is at a 7-year low.
- Reuters poll is projecting an 800,000 barrel build in this week’s EIA report. The API is showing a 6.035 million barrel build.
- As of 8:42 am CST: Brent crude oil is up $1.46 to $94.55, the US dollar index is down $0.332 to 109.488 while the nearby e-mini S&P 500 futures contract is up 10.00 at 3941.25.
Diesel
- China is possibly looking to place a cap on diesel exports at 1.5 million tons this is likely what has sent the market sharply lower this morning.
- Reuters poll is projecting a 600,000 barrel build while the API is showing a 1.75 million barrel build.
Gasoline
- Demand continues to be the ball and chain for RBOB. Implied demand had risen to 8.72 million barrels per day in last week’s report which was the highest since August 12th. With lower prices at the pump, we may see a bit more demand return to the market and push up against the 9 million barrels per day mark.
- Reuters poll is projecting a 900,000 barrel draw while the API is predicting a 3.23 million barrel draw.
Propane
- 1.0700 Conway and Belvieu at 1.0600.
- The market is finding a bit of strength as the summer build season comes to a close.
- The market is expecting a 1.8 million barrel build in today’s EIA report.
Natural Gas
- Germany continues to weigh nationalizing Energy giant Uniper as gas prices continue to soar and become harder and harder to finance.
- The Henry Hub market is rallying on hotter weather as well as seasonally low coal stockpiles ahead of winter.
- The Reuters poll is predicting a 64-77 BCF build in tomorrow’s inventory report.
Russian Crude Revenue: Russia has continued to export crude oil to finance itself and its war efforts in Ukraine. However, with the price decline of crude that revenue stream is now quite as full as it was a few months ago.
