Outlook: Energies are holding steady this morning as momentum has come to a halt. WTI tested its 200-day moving average late in the session yesterday but was unsuccessful. From a Bollinger perspective, the contract is showing overbought signs which could influence some selling. The headlines have leaned almost exclusively bullish this week. The macroeconomic reports have shown a softening economy, declining inflation, but a resilient labor market. This combination boosts the idea that economic tightening could come and go without a recession. Fundamentals have also leaned bullish this week with unplanned outages and fresh production cuts already being reflected in the export markets. The bullish trend could continue next week if the macros continue to provide dovish incentives for the Fed.
Crude
- Russia’s seaborne oil exports have already dropped by 500,000 bpd this month, according to Reuters.
- Russia’s offline primary oil refining capacity is expected to rise 40% in August.
- Yesterday, Shell suspended loadings of Nigeria’s Forcados crude due to a potential leak at the export terminal. The terminal has 220,000 bpd of export capacity.
- Production at Libya’s El Feel, Sharara, and 108 oilfields remains shut due to protests. El Feel has a production capacity of 70,000 bpd while Sharara’s capacity is 300,000 bpd.
- Saudi Arabia has shipped around 400,000 bpd less oil during the first half of July amidst fresh production cuts, according to Bloomberg data.
- The prompt continuous WTI contract is testing resistance at its 200-day moving average ($77.32.)
- The US dollar closed below 100.000 for the first time since April 2022 yesterday.
- Baker Hughes will report rig counts at 12:00 CT.
- As of 8:38 am CST: Brent crude oil down $0.08 to $81.28, US dollar index up $0.130 to 99.900 while the nearby e-mini S&P 500 futures contract is up 7.25 to 4550.00.
Diesel
- AAA reports the national average retail diesel price at $3.855, down from $5.592 a year ago during this time period.
- Chicago diesel basis has traded to record low levels this week and is still trading near -60c.
- This steep discount presents an ideal opportunity to fill storage and sell futures to protect against a downside move while remaining long basis.
Gasoline
- AAA reports the national average retail gas price at $3.566, down from $4.605 a year ago during this time period.
Propane
- Conway is trading at .6150 while Belvieu is trading at .6425.
- Conway is trading at 34% of crude.
- The US is exporting 63% of production as of 7/7/23.
Natural Gas
- Overnight weather runs were unchanged for the two-week forecast.
- Yesterday, US natural gas demand rose to 101.9 Bcf/d.
- The EIA reported a 49 Bcf injection into storage for last week.
- Total gas inventories are 349 Bcf above 5-year average levels.
Continuous Daily WTI: The prompt WTI contract closed above its upper Bollinger Band yesterday for the third consecutive session. A close above the upper band can be a signal of an overbought market, however, an RSI value of 64 remains short of the indication.
