Outlook: The energy complex is lower to start the week, bringing a halt to the momentum established last week. Crude appears to have found resistance at its 200-day moving average and the rest of the complex is following suit. Macroeconomic reports are light this week which may put more attention on the EIA’s weekly fundamental data. Global supply woes helped prop the market up last week and some of that is coming out today with the resumption of flows in Libya. Unplanned outages still remain an upside threat to the market. China has continued to show underperformance in key economic sectors; however, their oil demand remains on an upward trend. Prices will continue to look for balance in a constantly shifting global supply and demand dynamic.
Crude
- Oil production at Libya’s Sharara and El Feel oilfields have resumed flows this week after being shut in due to protests.
- China’s economy grew less than expected with 2Q GDP reported at 6.3% vs 7.3% est.
- China’s oil demand rose 14% to 14.87 mbpd in June, according to Bloomberg.
- China’s oil production rose 2.1% y/y to its highest level since 2015 at 4.25 mbpd.
- Russian oil exports from its western ports are expected to fall by 100-200,000 bpd next month, according to Reuters.
- Baker Hughes reported US oil rigs fell by 3 to 537 last week.
- The August WTI contract will expire on Thursday this week.
- A report that Saudi Arabia was further extending production cuts was published by error on Reuters around 4:00am CT and set the high for the day at $76.09.
- As of 8:12 am CST: Brent crude oil down $0.77 to $79.10, US dollar index up $0.030 to 99.944 while the nearby e-mini S&P 500 futures contract is down 3.25 to 4533.00.
Diesel
- Last week’s COT report showed HO managed money traders net bought 4,984 contracts and are net long 23,968 contracts.
- TSA reported 2.56 million passengers per day in June which is highest since July 2019.
Gasoline
- Last week’s COT report showed RBOB managed money traders increased their net length by 11,713 to 57,455 contracts.
Propane
- Conway is trading at .6225 while Belvieu is trading at .6475.
- Conway is trading at 35% of crude.
- The US is exporting 63% of production as of 7/7/23.
Natural Gas
- Overnight weather runs added 2 CDDs for the two-week forecast.
- Yesterday, US natural gas demand rose to 101.8 Bcf/d.
- Baker Hughes reported US natural gas rigs fell by 2 to 133 last week.
Continuous Daily WTI: The prompt WTI contract rejected its 200-day moving average last week and has tested support near its 100-day moving average this morning. The channel between the two moving averages may act to control a sideways trend this week if no compelling market drivers develop.
