Outlook: The energy complex is under pressure today following bearish economic data from China and poor refined product sales out of India. China and India are two of the leading drivers in energy demand and both posted disappointing numbers to the trade today. Crude and products are off their lows which may be an indication that the weakness is a bump in the road rather than a trend change. Further bearish developments could arise this week if US inflation data comes in hot. Expectations are for a y/y increase which will build in a little bit of a cushion. The US dollar is finding strength today up over 600 points, which is another bearish driver for dollar-based commodities. The EIA will release its STEO report today before releasing weekly inventories tomorrow morning.
Crude
- Chinese oil imports were down 18.8% in July.
- Overall, Chinese total imports contracted 12.4% in July vs 5% est.
- Russia’s four-week average crude exports rose to 3.02 mbpd last week.
- The US SPR rose by 1 million barrels last week commencing the start of buybacks after the historic draws last year.
- Poland said yesterday, the leak in the Druzhba pipeline has been fixed and full functionality has been restored.
- The EIA will release its Short-term Energy Outlook around noon.
- The API will report its inventory survey at 3:30 CT.
- Reuters estimates crude stocks fell by 200,000 barrels last week.
- As of 8:10 am CST: Brent crude oil down $1.56 to $83.86, US dollar index up $0.668 to 102.714 while the nearby e-mini S&P 500 futures contract is down 33.25 to 4504.00.
Diesel
- India’s fuel consumption in July fell 6.6% m/m to a 10-month low, with diesel sales falling 13% m/m.
- Reuters estimates diesel stocks fell by 200,000 barrels last week.
Gasoline
- India’s gasoline sales fell 5.3% in July.
- Reuters estimates gasoline stocks rose by 200,000 barrels last week.
Propane
- Conway is trading at .7400 while Belvieu is trading at .7575.
- Conway is trading at 38% of crude.
- The US is exporting 51% of production as of 7/28/23.
Natural Gas
- Overnight weather runs added 1 CDD to the two-week forecast.
- Yesterday, US natural gas demand rose to 101.4 Bcf/d.
- US natural gas production is expected to average 102 Bcf/d over the next two weeks.
- The middle of August is forecasted to be hotter than the 10-year average.
Continuous Daily WTI: The prompt crude contract is under pressure today following bearish economic data from China. Previously selloffs have been short-lived and this one will be tested in the same way. Early August lows may act as support if further downside develops, and a dip to the high $70s may present a buying opportunity.
