Outlook: The energy complex is showing strength this morning with crude and products all in the green. Refined products have outpaced crude this week strengthening crack spreads and profitability for those producing fuel. Steady demand and reduced production capacity continue to pressure inventories which trend well below 5-year average levels. Economic tightening may be stunting demand however not to a degree where production surpluses have developed. Which traders attention shifting toward fundamentals, further upside may be seen next week. The Fed will meet on Wednesday and is expected to increase interest rates by 25 bps, however, the market may already be taking this into consideration. Verbiage providing insight on what’s to come for the rest of the year may be where the volatility lies.
Crude
- China announced measures today intended to help boost sales of automobiles and electronics as stimulus efforts continue.
- China’s apparent oil demand was up 14% in June, according to government data.
- UAE’s oil minister said OPEC+ actions are sufficient but are ready for further action if necessary.
- Russian oil ship-to-ship transfers have halted in July with only one reported transfer compared to 14 in July.
- The Biden administration proposed an increase in bonding rates to cover the cost of plugging abandoned oil and gas wells on federal lands. The minimum lease bond would rise from $10,000 to $150,000
- Baker Hughes will report rig counts at 12:00 CT.
- As of 8:10 am CST: Brent crude oil up $1.03 to $80.67, US dollar index up $0.141 to 101.021 while the nearby e-mini S&P 500 futures contract is up 24.25 to 4589.00.
Diesel
- European oil refinery output was down 5% in June y/y, according to Euroilstock data.
- Venezuela’s idled refinery activity is up to 14% after failed repair attempts left the country with 1 working refinery, tightening supplies and limiting exports.
- The prompt continuous diesel contract is trading above its upper Bollinger Band today, which can be an overbought indicator.
Gasoline
- AAA reports the national average retail gas price at $3.587, up 2 cents from last week.
- The prompt continuous gasoline contract is trading above its upper Bollinger Band today.
Propane
- Conway is trading at .6500 while Belvieu is trading at .6850.
- Conway is trading at 36% of crude.
- The US is exporting 62% of production as of 7/14/23.
- The EIA reported propane stocks rose by 887,000 barrels.
Natural Gas
- Overnight weather runs added 1 CDDs for the two-week forecast.
- Yesterday, US natural gas demand fell to 102.9 Bcf/d.
- The EIA reported a 41 Bcf injection into storage for last week.
- Working gas inventories are 360 Bcf below 5-year average levels.
Continuous Daily RBOB: Refined products have had another strong week and the gasoline is on pace for a fifth consecutive day of gains. The market is showing early signs of being overbought which could stall momentum next week, but the April high at $2.89 remains the aggressive resistance target.
