Outlook: Energies are working higher today with crude and products all in the green. Inventory projections from the industry are leaning bullish with stock draws widely anticipated providing support to pricing. Product demand could be a driver this week after a soft report last week following the 4th of July holiday. Gasoline demand has remained strong this year and crack spreads continue to show profitability with stocks well below 5-year averages. The forward curve remains in backwardation reflecting the higher nearby demand which is expected for this time of year. Diesel demand lags year-ago levels in the face of economic headwinds, however, a reduction in recessionary probabilities has allowed the market to make a run higher. Look for the 200-day moving average in the continuous prompt WTI contract to provide resistance if the EIA provides additional bullish momentum this morning.
Crude
- Taiwanese state refiner CPC Corp bought 4 million barrels of WTI Midland crude for October delivery as Asian refiners appetite for American oil grows.
- Saudi Arabia plans to shut its Al Jubail refinery for maintenance at the end of September. The refinery has a crude processing capacity of 450,000 bpd and will be shut for 45 days.
- BP’s Gelsenkirchen oil refinery in Germany which can process 265,000 bpd of crude, will be shut in for maintenance starting in September.
- OPEC+ will hold a monitoring meeting on August 4th.
- Reuters estimates crude stocks fell by 2.4 million barrels last week.
- An industry survey yesterday afternoon showed crude stocks fell by 797,000 barrels last week, according to sources citing the API.
- The EIA will report inventories at 9:30 CT.
- The August WTI contract will expire tomorrow.
- As of 7:50 am CST: Brent crude oil up $0.62 to $80.25, US dollar index up $0.280 to 100.221 while the nearby e-mini S&P 500 futures contract is down 0.25 to 4587.00.
Diesel
- Reuters estimates diesel stocks fell by 100,000 barrels last week.
- An industry survey yesterday afternoon showed diesel stocks rose by 1 million barrels last week, according to sources citing the API.
- Russia’s seaborne diesel and gasoil exports rose 11% to 1.9 million tonnes in the first 17 days of July, according to Reuters.
Gasoline
- Reuters estimates gasoline stocks fell by 2.8 million barrels last week.
- An industry survey yesterday afternoon showed gasoline stocks fell by 2 million barrels last week, according to sources citing the API.
Propane
- Conway is trading at .6125 while Belvieu is trading at .6550.
- Conway is trading at 34% of crude.
- The US is exporting 63% of production as of 7/7/23.
- OPIS estimates propane stocks rose by 2.45 million barrels last week.
Natural Gas
- Overnight weather runs added 4 CDDs for the two-week forecast.
- Yesterday, US natural gas demand rose to 102.8 Bcf/d.
- On Monday ERCOT set a peak load record of 81.9 GW as extended heat waves work across the south.
Continuous Daily WTI: The prompt crude contract remains consolidated between its 100 & 200-day moving averages. Fundamentals have leaned bullish while economic headwinds have lightened to allow this higher range to develop. Look for a breach in either direction to signal a trend change.
