Outlook: Energy markets are mixed this morning with crude moving higher while products lag lower. Despite the record draw in crude stocks reported yesterday, the market finally felt overextended and sold off. Soft demand data behind the headline crude draw also supported the reversal lower. Global supplies are tightening which has fueled the month-long run and are expected to tighten further through the end of the year. OPEC+ will host a virtual panel meeting tomorrow to review its current production relative to market conditions. Expectations are that production cuts will remain unchanged, which includes Saudi Arabia’s voluntary 1 mbpd cut as reported by the SPA.
Crude
- OPEC+ will meet on Friday and are expected to keep production cuts steady.
- Saudi Arabia is expected to extend their voluntary production cut of 1 million bpd, according to the Saudi Press Agency.
- Libya plans to export 1.01 mbpd of crude in August, down from 1.06 mbpd in July.
- The BOE raised interest rates to a 15-year high of 5.25% today.
- The EIA reported crude stocks fell by a record 17 million barrels last week.
- US crude exports rose by 692,000 barrels last week to 5.2 mbpd.
- Nonfarm payrolls will be reported tomorrow at 7:30 CT.
- As of 8:18 am CST: Brent crude oil up $0.95 to $84.15, US dollar index up $0.071 to 102.661 while the nearby e-mini S&P 500 futures contract is down 19.25 to 4517.00.
Diesel
- Russia’s refined fuel exports rose by 203 kbpd to 2.55 mbpd last week, according to Vortexa data.
- The EIA reported diesel stocks fell by 796,000 barrels last week.
- Diesel stocks sit 19.994 million barrels below 5-year average levels.
Gasoline
- The EIA reported gasoline stocks rose by 1.4 million barrels last week.
- Gasoline stocks sit 14.6 million barrels below 5-year average levels.
- 4-week seasonal gas demand has fallen for 4 consecutive weeks to 8.8 mbpd.
Propane
- Conway is trading at .7200 while Belvieu is trading at .7350.
- Conway is trading at 38% of crude.
- The US is exporting 51% of production as of 7/28/23.
- The EIA reported propane stocks rose by 2.9 million barrels last week.
- Propane stocks sit at 18.1 million barrels above 5-year average levels.
Natural Gas
- Overnight weather runs added 3 CDDs for the two-week forecast.
- Yesterday, US natural gas demand fell to 99.8 Bcf/d.
- US natural gas production is expected to average 102 Bcf/d over the next two weeks.
- The EIA is expected to report an 18 Bcf injection into storage for last week.
Russian Oil: Russia’s seaborne exports and crude processing are showing evidence that Russia is complying with OPEC+ pledged cuts. This evidence had been lacking until recently which put downward pressure on the marketplace. The combined daily volume for exports and processing totals around 8.6 mbpd for July.
