Outlook: The energy complex is edging higher today after losses were reversed in yesterday’s session. Comments from Ukraine stoked fears that Russian oil cargoes could be hindered due to war conflicts. Buying turned widespread with the market still carrying clear momentum to the upside despite other bearish indicators piling up. Crude and diesel are testing multi-month highs which could provide further upside momentum assuming these levels hold. The API released its inventory survey yesterday afternoon which showed a large build in crude but a notable draw in diesel stocks. Diesel refining margins remain strong incentivizing refineries to keep runs elevated. The EIA will release inventories are 9:30 which may provide additional direction for the session.
Crude
- Prompt WTI is challenging its April high of $83.53 today.
- The threat of Ukraine targeting Russian oil tankers likely has built a premium in the market.
- The EIA released its STEO report yesterday which forecasted US crude production to reach a record 12.8 mbpd in 2023, up from 12.6 mbpd in its previous forecast.
- The EIA revised its 2023 WTI forecast to average $77.79, up 4.5% from its July report.
- Reuters estimates crude stocks rose by 600,000 barrels last week.
- An industry survey yesterday afternoon showed crude stocks rose by 4 million barrels last week, according to sources citing the API.
- The EIA will report inventories at 9:30 CT
- As of 8:25 am CST: Brent crude oil up $0.77 to $86.94, US dollar index down $0.126 to 102.402 while the nearby e-mini S&P 500 futures contract is up 3.25 to 4521.00.
Diesel
- An industry survey yesterday afternoon showed diesel stocks fell by 2.1 million barrels last week, according to sources citing the API.
- Reuters estimates diesel stocks fell rose by 60,000 barrels last week.
- Diesel traded in a 15-cent range yesterday after turning losses into gains yesterday.
Gasoline
- An industry survey yesterday afternoon showed gasoline stocks fell by 413,000 barrels last week, according to sources citing the API.
- Reuters estimates gasoline stocks fell by 80,000 barrels last week.
- The EIA revised its retail gas price higher by 7.7% to $3.69 for Q3 in its August STEO.
Propane
- Conway is trading at .7250 while Belvieu is trading at .7375.
- Conway is trading at 38% of crude.
- The US is exporting 51% of production as of 7/28/23.
- OPIS estimates propane stocks rose by 1.88 million barrels last week.
Natural Gas
- Overnight weather runs removed 2 HDDs to the two-week forecast.
- Yesterday, US natural gas demand fell to 100.4 Bcf/d.
- The EIA reduced its Q3 price forecast for HH natural gas by 3.4% to $2.54/MMBtu and its Q4 forecast by 2.8% to $2.95.
- Potential strikes at Australian LNG facilities may be providing support to HH today.
Continuous Daily WTI: After a sharp reversal yesterday, WTI is testing resistance at its April high of $83.53. A breach of this level may give way to a move toward $85. Today’s EIA data may need to lean bullish for momentum to continue throughout the session.
