Outlook: For the fourth consecutive day in a row, energies are mixed to start the session. This morning crude and diesel are hovering near even while gas trends lower. Yesterday, the market did in fact find direction from the weekly EIA data which showed a larger-than-expected draw in crude stocks for the second week in a row. This was largely supported by crude exports hitting their second-highest level on record. The product side was more neutral with builds accompanied by decreases in demand week-over-week. News is on the light side this morning, however, Fed Chair Jerome Powell did reiterate at a conference today that more interest rate hikes are likely coming. The dollar is unresponsive this morning but should find a fresh driver with Chinese economic data due out tonight.
Crude
- At a conference in Madrid today, Jerome Powell said two more interest rate hikes are likely needed to bring inflation down to the 2% target.
- OPEC has once again banned reporters from Reuters, Bloomberg, and the WSJ from its seminar in Vienna scheduled for July 5th and 6th.
- The Panama Canal will likely keep restrictions on shippers due to water levels falling to 4-year lows.
- The Biden Administration is working on a new policy that would require oil companies with offshore platforms to have 12.5 billion set aside to clean up potential oil spills.
- Chinese manufacturing and non-manufacturing PMI will be reported tonight.
- The US SPR fell by 1.47 million barrels last week.
- The EIA reported crude stocks fell by 9.6 million barrels last week.
- US crude exports surged last week, up 795,000 bpd to 5.3 mbpd, which is the second highest level on record.
- As of 7:27 am CST: Brent crude oil down $0.11 to $73.92, US dollar index down $0.070 to 102.835 while the nearby e-mini S&P 500 futures contract is up 14.25 to 4431.00.
Diesel
- The EIA reported diesel stocks rose by 123,000 barrels last week.
- Diesel demand w/w fell by 16.7% to 3.3mbpd.
Gasoline
- The EIA reported gasoline stocks rose by 603,000 barrels last week.
- Gasoline demand w/w fell by 0.7% to 9.3mbpd and remains 3.8% above year-ago levels on a 4-week average basis.
- Traffic levels in China fell by 31% this week, according to BloombergNEF.
Propane
- Conway is trading at .5275 while Belvieu is trading at .5550.
- Conway is trading at 32% of crude.
- The US is exporting 75% of production as of 6/23/23.
- The EIA reported propane stocks rose by 2.6 million barrels last week.
Natural Gas
- Overnight weather runs removed 3 CDDs the two-week forecast.
- Yesterday, US natural gas demand rose to 99.6 Bcf/d.
- The EIA is expected to report an 83 Bcf injection into storage for last week.
Continuous Daily ULSD: The prompt diesel market has seen weakness this week and is testing its 50-day moving average as support. A focus on the bearish macroeconomic environment has had a tendency to pressure diesel prices and that’s what we saw this week. A close below support can signal further downside.
