Outlook: The momentum in the energy complex continues this week with crude and products all observing gains. The prompt continuous crude contract is hunting down its 200-day moving average resistance today and looks poised to finish above the mark. A close above this level ($77.14) can be viewed as a bullish indicator. Products are already in breakout mode, well above the range they traded in the last few months. Crack spreads continue to rise meaning more profitable margins for refiners. China continues to roll out stimulus measures in varying degrees, but any effort to support their economy lends general support to energies. Macro influences will return this week after a quiet week last week, with the Fed and ECB expected to increase interest rates. Look for comments about what’s in store for the rest of the year to provide market influence if the rate hikes fall in line with expectations.
- China’s state planner released measures to promote, encourage, and spur private investment in some infrastructure sectors today. Stimulus efforts remain positive for potential energy demand.
- Russia is ramping up exports through the northern sea route to China with two tankers carrying 730,000 barrels of crude in transit.
- The trade expects the Fed and ECB to increase interest rates by 25 bps this week.
- Baker Hughes reported US oil rigs fell by 7 to 530 last week.
- US oil rig counts are 15% lower than 2022 highs.
- Prompt WTI is trading above its 200-day moving average today for the first time since August 2022.
- As of 8:19 am CST: Brent crude oil up $0.67 to $81.74, US dollar index up $0.152 to 101.223 while the nearby e-mini S&P 500 futures contract is up 9.25 to 4574.00.
- A heat wave will move through the Midwest this week which should support irrigation demand.
- Last week’s COT report showed HO-managed money traders net sold 5,359 contracts and are net long 18,609 contracts.
- US gasoline imports from Europe fell to an 8-week low at 169,000 bpd last week.
- Russia is considering limiting gasoline exports to support domestic inventories and pricing.
- August RBOB is setting new contract highs today, previously at $2.8247.
- Last week’s COT report showed RBOB-managed money traders added 7,212 contracts to their net long 64,667 contracts.
- Conway is trading at .6475 while Belvieu is trading at .6850.
- Conway is trading at 35% of crude.
- The US is exporting 62% of production as of 7/14/23.
- Overnight weather runs removed 3 CDDs for the two-week forecast.
- Yesterday, US natural gas demand fell to 101.6 Bcf/d.
- US natural gas rigs fell by 2 to 131 last week.
Continuous Daily WTI: The prompt continuous crude contract is challenging its 200-day moving average today and will look to close above the mark for the first time since August 2022. A close above this level will likely bring $80 as the next target resistance for the week.