Outlook: The energy complex is mixed this morning and trade may trend on the light side with a holiday breaking up the week tomorrow. The market has fresh headlines this morning but is seeing a relatively muted response. Saudi Arabia and Russia each announced production and export cuts for August ahead of the OPEC+ seminar in Vienna this week. Russia’s export reduction of 500,000 bpd may have stemmed from current production cuts not being reflected in the outbound market, which other members of the group didn't receive well. Regardless, energies still face stiff macroeconomic headwinds which have presented rangebound trade. FOMC minutes and nonfarm payroll data will be released later this week which could disrupt any weekly momentum established beforehand.
Crude
- Saudi Arabia announced they will extend their voluntary 1 million bpd production cut through August.
- Russia announced they will reduce their oil exports by 500,000 bpd in August.
- The US purchased 3.2 million barrels of crude in a tender offer to refill the SPR in September. The avg purchase price was $73.39. A total of 6.3 million barrels has been purchased for August and September.
- Baker Hughes reported US oil rigs fell by 1 to 545 last week.
- US oil rig counts are lower by 50 y/y.
- US manufacturing PMI will be reported at 9:00am CT.
- As of 8:39 am CST: Brent crude oil up $0.23 to $75.64, US dollar index up $0.044 to 102.956 while the nearby e-mini S&P 500 futures contract is down 4.25 to 4483.00.
Diesel
- Last week’s COT report showed ULSD managed money traders net bought 6,455 contracts and are net long 16,820.
Gasoline
- Wholesale gasoline prices in Russia rose 19% m/m in May, according to Bloomberg data.
- US gasoline imports from Europe posted a 12-month high in June at 460,000 bpd.
- Last week’s COT report showed RBOB managed money traders net sold 6,686 contracts and are net long 48,599 contracts.
Propane
- Conway is trading at .5150 while Belvieu is trading at .5450.
- Conway is trading at 32% of crude.
- The US is exporting 75% of production as of 6/23/23.
Natural Gas
- Overnight weather runs removed 1 CDDs the two-week forecast.
- Yesterday, US natural gas demand rose to 101.6 Bcf/d.
- Baker Hughes reported nat gas rigs fell by 6 to 124 last week.
Continuous Daily WTI: The prompt crude contract is testing resistance at its 50-day moving average today. The market is finding support from extended OPEC cuts but the response has been relatively tame. The market will likely need more fuel to make a convincing bullish run.
