Outlook: The energy complex is off and running this morning as many participants return to the desk after a long holiday weekend. The strength could partially be attributed to traders who went risk-off prior to the weekend, opting for re-entry this morning. Saudi Arabia has said it will do whatever it takes to bring balance to the oil market following its decision to extend its voluntary cut to August. Additional Kazakhstan is seeing a significant disruption to oil and refined production due to rolling blackouts, which are expected to continue through this week. Inventory reports are delayed by a day this week due to the holiday so we will see what the API survey says this afternoon at 3:30 and the EIA will confirm data tomorrow morning at 10:00 am CT.
- 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 have been purchased for August and September.
- Kazakhstan’s oil production fell by 1.46 mbpd this week due to power outages.
- The FOMC minutes will be released today at 1:00 CT.
- The US SPR fell by 1.4 million barrels last week, with 24.7 of 26 million barrels released of the mandate.
- China’s services activity expanded at its slowest pace in five months in June, according to their private sector survey.
- The API will report its inventory survey today at 3:30pm CT.
- The EIA will report inventories tomorrow morning at 10:00am CT.
- As of 8:16 am CST: Brent crude oil down $0.13 to $76.12, US dollar index up $0.015 to 103.055 while the nearby e-mini S&P 500 futures contract is down 21.25 to 4471.00.
- Diesel is leading the complex higher, up nearly 5% on the day.
- Reuters estimates diesel stocks rose by 500,000 barrels last week.
- Last week’s COT reported showed ULSD managed money traders net bought 6,455 contracts and are net long 16,820.
- Reuters estimates gasoline stocks fell by 1.1 million barrels last week.
- Last week’s COT report showed RBOB managed money traders net sold 6,686 contracts and are net long 48,599 contracts.
- 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.
- Overnight weather runs removed 1 CDDs the two-week forecast.
- Yesterday, US natural gas demand rose to 99.9 Bcf/d.
- US LNG exports fell by 10% in June to 6.82 MT, according to Reuters data.
Continuous Daily ULSD: The prompt diesel contract has continued to find support near its 50-day moving average represented by the blue line. With a freshly developed upward trend since May, the 100-day moving average near $2.55 seems like a good upside short-term target.