Outlook: The upward momentum in the energy complex continues today with crude and products holding strong gains. WTI has traded above $80 today for the first time since April while products are setting $3.00 in their sights. Reports that Saudi Aramco may increase prices to Asian customers for September is a supportive development for the crude market as the market tightens. Products continue to benefit from supply deficits to 5-year averages despite elevated refinery rates. The threat of refinery outages remains fragile with a significant heat wave sitting on key areas of production. The recent surge in gas futures will likely translate to higher prices at the pump as we look toward Labor Day. Higher gas prices may also present problems for inflation which has been falling at a steady clip since the Fed began hiking rates. The industry expects the Fed to take a longer pause with rate hikes following the recent increase, but a hiccup in inflation could present a more delicate outlook.
- Saudi Aramco is expected to increase its oil price to Asian customers by 50c for September sales, according to a Bloomberg survey.
- UBS expects a 2 million bpd deficit in global crude supply and demand for July and August, compared to 700,000 bpd in June.
- OPEC+ will meet on August 4th to review its cuts relative to market conditions.
- The Fed increased interest rates by 25 bps to 5.5% yesterday.
- CME Fedwatch is pricing in an 80% the Fed will pause interest rates during its September meeting.
- The ECB increased interest rates for a ninth consecutive time today with a 25 bps increase.
- The EIA reported a 600,000 barrel draw in crude stocks for last week.
- Cushing stocks fell by 2.6 million barrels.
- US crude production fell to 12.2 mbpd.
- As of 8:00 am CST: Brent crude oil up $1.09 to $84.01, US dollar index up $0.199 to 101.086 while the nearby e-mini S&P 500 futures contract is up 33.25 to 4629.00.
- The EIA reported diesel stocks fell by 245,000 barrels last week.
- US diesel stocks sit 19.7 million barrels below 5-year seasonal average levels.
- The EIA reported gasoline stocks fell by 786,000 barrels last week.
- US gasoline stocks sit 17.2 million barrels below 5-year seasonal average levels.
- Conway is trading at .6450 while Belvieu is trading at .6800.
- Conway is trading at 35% of crude.
- The US is exporting 64% of production as of 7/21/23.
- The EIA reported a smaller-than-expected build of 1 million barrels for propane stocks.
- Overnight weather runs were unchanged for the two-week forecast.
- Yesterday, US natural gas demand increased to 103.5 Bcf/d.
- The EIA is expected to report a 21 Bcf injection into storage for last week.
Continuous Daily HO: The prompt diesel contract is nearing its 200-day moving average which may present resistance at $2.9229. The diesel market has not traded above this technical level since November 2022 when diesel was trading near $3.70. Sporadic refinery outages have provided support to both gas and diesel over the last few weeks.