Outlook: The energy complex is showing a nice rally this week with crude and products all trading higher this morning. The market seems to be taking note of declining crude exports from Russia to support tightening fundamentals. Traders have been patiently trading the data or the facts rather than the rumors on the fundamental side which is becoming more evident. Providing further support today was a cooler-than-expected inflation print. Both core and headline number came in below expectations and the US dollar is off over 500 points. The macro space has been a significant bearish driver in energies but a pause in the gloomy outlook has allowed prices to return to multi-month highs. The EIA will release US fundamentals for last week at 9:30 CT, while industry estimates are relatively mixed.
Crude
- EIA expects WTI crude prices will reach $80 by the 4th quarter of this year.
- The EIA revised its 2023 oil production forecast lower to 12.56 mbpd, down from 12.61 mbpd last month.
- The US SPR fell by 400,000 barrels last week which completes the 26-million-barrel mandated release.
- Reuters estimates crude stocks rose by 500,000 barrels last week.
- An industry survey yesterday afternoon showed US crude stocks rose by 3 million barrels, according to sources citing the API.
- US June CPI rose by 3.0% vs 3.1% est. and 4% previous.
- As of 8:11 am CST: Brent crude oil up $0.50 to $79.88, US dollar index down $0.542 to 101.190 while the nearby e-mini S&P 500 futures contract is up 34.25 to 4507.00.
Diesel
- Reuters estimates diesel stocks fell by 300,000 barrels last week.
- An industry survey yesterday afternoon showed diesel stocks rose by 2.9 million barrels, according to sources citing the API.
Gasoline
- Reuters estimates gasoline stocks fell by 700,000 barrels last week.
- An industry survey yesterday afternoon showed gasoline stocks rose by 1 million barrels, according to sources citing the API.
Propane
- Conway is trading at .6075 while Belvieu is trading at .6425.
- Conway is trading at 34% of crude.
- The US is exporting 48% of production as of 6/30/23.
- The EIA is expected to report a 2.7 million barrel build in propane stocks for last week.
- Winter propane strips for 2024-2025 were priced around 73 cents last week. Please reach out for updated values.
- A rally in crude prices has quickly brought propane values off its lows.
Natural Gas
- Overnight weather runs removed 8 CDDs to the two-week forecast.
- Yesterday, US natural gas demand rose to 98.8 Bcf/d.
- Another heat wave is expected to impact Texas through July 14th.
- The EIA decreased its LNG export forecast for 2023 by 0.2% to 12 Bcf/d but increased their 2024 forecast by 4.6% to 13.3 Bcf/d.
US Dollar Index: The US dollar index has fallen to its lowest level in 2 months following today’s inflation report. Inflation fell more than expected today which could influence the Fed’s interest rate outlook for the rest of the year if the pattern persists. A cheaper dollar makes dollar-based commodities less expensive for non-dollar currency holders, which can be supportive of demand.
