Outlook: Energies are higher today again squashing hopes of a trend change following yesterday’s selloff. Market do appear to be finding more resistance around these levels which means the bull camp will likely need fresh fuel to reach their next targets. The narrative will continue to be global deficits amidst production cuts vs economic slowdown and demand destruction. Currently, global demand has remained healthy which has allowed the prospect for deficits to become real and the market has traded just that. A pause in interest rate hikes and any signal for a dovish pivot could allow demand to remain steady, which already trends above year-ago levels. Look for any unplanned refinery maintenance or new turnaround announcements to influence prices over the next few weeks. Turnaround season typically kicks off in September which could pressure product inventories further.
Crude
- The IEA released its monthly report today which left their 2023 growth forecast unchanged at 2.2 mbpd to 102.2 mbpd.
- The IEA forecast oil demand to average 102.2 mbpd this year, with China accounting for 70% of growth.
- The IEA lowered its 2024 growth forecast by 100,000 bpd, citing slowing economic conditions.
- OPEC’s oil production fell by 836,000 barrels in July.
- US CPI came in y/y at 3.2% vs 3.3% est. M/m remained flat at .2%
- US PPI came in at 0.8% y/y vs 0.7% est.
- Michigan Consumer Sentiment will be reported at 9:00 CT.
- Baker Hughes will report rig counts at 12:00 CT.
- As of 8:22 am CST: Brent crude oil up $0.13 to $86.52, US dollar index up $0.182 to 102.702 while the nearby e-mini S&P 500 futures contract is down 17.25 to 4469.00.
Diesel
- The EIA reported diesel stocks fell by 1.7 million barrels.
- US diesel stocks now sit 23.1 million barrels below 5-year average levels.
- Refinery utilization continues to run hot amidst elevated crack spreads at 93.8%
Gasoline
- AAA reports the national average retail gas price at $3.841, up a penny from last week.
- Traffic in China rose 2.1% last week and has reached 110.3% of January 2021 levels.
Propane
- Conway is trading at .7075 while Belvieu is trading at .7125.
- Conway is trading at 38% of crude.
- The US is exporting 67% of production as of 8/4/23.
- The EIA reported US propane stocks rose by 1.3 million barrels last week.
- US propane stocks sit 17.7 million barrels above 5-year seasonal average levels.
Natural Gas
- Overnight weather runs were unchanged for the two-week forecast.
- Yesterday, US natural gas demand fell to 101.6 Bcf/d.
- The EIA reported a 29 Bcf injection for last week vs 24 Bcf est.
- The March-April spread may present a bull-spread opportunity. Consider buying this spread under 30c or in a breakout move above 37.5 cents.
Daily US Dollar: The US dollar has been on a steep climb since bottoming out sub $100 in mid July. A higher dollar can pressure demand from non-dollar currency holders looking to purchase dollar-based commodities.
