Morning Highlights
Morning Highlights

7-28-23 Energies on pace for fifth consecutive weekly gain...

Riley Schwieger

Jul 28, 2023

Outlook: The energy complex is on track for its fifth consecutive week of gains and continues to work higher this morning. WTI closed above $80 for the first time since April and may target April highs next week if the momentum continues. The macroeconomics continue to support the Fed's goal of a soft landing with Core PCE, a metric for inflation, falling greater than expected this morning. Refined products have their sights set on $3.00 with the August RBOB contract just 2 cents away. Higher energy prices could be problematic for inflation if the market continues on its upward trend which could cause a wrinkle in the soft landing expectations.    


  • Oil is on track for its fifth consecutive weekly gain.
  • US GDP grew faster than expected for Q2 at 2.4%
  • The backwardation between the first two WTI contracts has risen nearly 20 cents this week.
  • Prompt continuous WTI closed above $80 yesterday for the first time since April.
  • Baker Hughes will report rig counts at 12:00 CT.
  • US Core PCE fell more than expected today to 4.1% vs 4.2% est.
  • The Dow went on its longest winning streak since 1987 before closing lower yesterday.
  • As of 8:25 am CST: Brent crude oil down $0.19 to $84.05, US dollar index down $0.102 to 101.671 while the nearby e-mini S&P 500 futures contract is up 29.25 to 4594.00.


  • AAA reports the national average retail diesel price at $3.972, up from $3.873 a week ago.
  • The diesel crack has surpassed the gasoline crack with a move above $42 today.


  • AAA reports the national average gas price at $3.732, up from $3.587 a week ago.
  • Higher energy prices could cause problems for y/y inflation data moving forward.


  • Conway is trading at .6900 while Belvieu is trading at .7100.
  • Conway is trading at 36% of crude.
  • The US is exporting 64% of production as of 7/21/23.

Natural Gas

  • Overnight weather runs removed 8 CDDs for the two-week forecast.
  • Yesterday, US natural gas demand increased to 107.6 Bcf/d.
  • The EIA reported a smaller than expected injection of 16 Bcf.
  • Working gas inventories remain 345 Bcf higher than the 5-year average.

WTI prompt spread: The spread between the September and October WTI contract have grown increasingly backwardated this week. The spread is up nearly 20 cents as supply concerns continue to mount amidst OPEC+ cuts. This spread may target the April highs with Saudi voluntary production cuts in effect through August.