Morning Highlights
Morning Highlights

6-22-23 Energies slide on larger-than-expected BoE interest rate hike...

Riley Schwieger

Jun 22, 2023

Outlook: The energy complex has seen back-and-forth trade this week, alternating sessions of gains and losses. Recessionary fears may have been stoked again this morning as the Bank of England increased interest rates at a higher clip than expected. Economic slowdown throughout multiple major economies brings a substantial threat to energy demand and continues provide consistent headwinds. Fed fund futures expect the US to raise interest rates by 25 bps next month while Powell suggested yesterday that another hike beyond that is likely. It appears that the first tropical storm/hurricane threat will be a miss this summer with tropical storm Bret expected to weaken tonight. The EIA will report inventory data at 10am CT this morning. Industry estimates are calling for builds across the board which doesn’t bode well for those hoping for a spark this morning if the government data confirms the bearish projections.


  • Yesterday Fed Chair Jerome Powell said two more interest rate hikes of 25 bps by the end of the year were likely.
  • The BoE raised interest rates by 50 bps today, which exceeded the estimate of a 25 bps increase.
  • Tropical storm Bret is nearing hurricane strength, however weakening is expected tonight.
  • US crude oil refining capacity increased by 100,000 barrels to 18.1 million bpd, according to government data. This does not include Exxon Mobil’s 250,000 bpd expansion which would bring the total near 18.3 mbpd for the year.
  • The prompt WTI spread flipped back to Contango today.
  • Reuters estimates US crude stocks rose by 300,000 barrels last week.
  • An industry survey yesterday afternoon showed crude stocks fell by 1.2 million barrels last week, according to sources citing the API
  • The EIA will report inventories this morning at 10:00am CT
  • As of 7:50 am CST: Brent crude oil down $1.37 to $75.75, US dollar index down $0.026 to 102.045 while the nearby e-mini S&P 500 futures contract is down 9.25 to 4400.00.


  • Reuters estimates US diesel stocks rose by 700,000 barrels last week.
  • An industry survey yesterday afternoon showed diesel stocks fell by 300,000 barrels last week, according to sources citing the API.


  • Reuters estimates gasoline stocks rose by 100,000 barrels last week.
  • An industry survey yesterday afternoon showed gasoline stocks rose by 2.9 million barrels, according to sources citing the API.
  • GasBuddy estimates US retail gasoline demand rose by 1.6% last week.


  • Conway is trading at .5575 while Belvieu is trading at .5875.
  • Conway is trading at 32% of crude.
  • The US is exporting 63% of production as of 6/9/23.
  • OPIS estimates propane stocks rose by 3 million barrels last week.

Natural Gas

  • Overnight weather runs removed 4 CDDs the two-week forecast.
  • Yesterday, US natural gas demand fell to 93.3 Bcf/d.
  • The EIA is expected to report a 92 Bcf injection for last week.
  • Spot prices for Texas gas basis are sharply higher at temperatures sustained 100F.
  • Gas accounts for 49% of Texas’s power generation.

Continuous Daily RBOB: The weakness in the gasoline market has pushed prices through support levels at the 50 & 100-day moving averages. Prices have fallen ~10 cents this week and have consistently been the weakest leg in the complex. Further downside could leave us testing the 200-day moving average at $2.5260 by the end of the week. Look for the inventory report today to provide additional bias.