Outlook: Energies are positive this morning with diesel leading the complex higher. Diesel stocks are 16% below 5-year average levels which will continue to be a supportive element as we head into maintenance season. The bearish run this week may have run its course given the price action today. The Fed minutes yesterday leaned slightly bearish but not on a level that would tip the market into a downtrend. Chinese economic data will continue to be closely monitored but ongoing stimulus efforts may be providing a safety net. Under the current circumstances, a tightening fundamental complex will likely maintain trend control until another round of fresh drivers develop. Increasing energy prices still pose a significant threat to the Fed's battle against inflation and more instability could be in store.
Crude
- WTI Midland and Magellan East Houston crude grades have risen to their highest premium vs WTI since early July amidst elevated exports of sweet crude.
- WTI’s prompt spread fell to its lowest level this month yesterday.
- The US SPR rose by 600,000 barrels last week.
- The EIA reported crude stocks fell by 5.9 million barrels last week.
- US crude production rose by 100,000 bpd last week to 12.7 mbpd.
- The US SPR rose by 600,000 barrels last week.
- The FOMC minutes yesterday showed the Fed remains undecided on future interest rate hikes.
- CME Fedwatch is pricing in an 88% chance the Fed will pause rate hikes at their next meeting in September.
- As of 7:52 am CST: Brent crude oil up $0.87 to $84.32, US dollar index down $0.325 to 102.106 while the nearby e-mini S&P 500 futures contract is up 15.25 to 4435.00.
Diesel
- The EIA reported diesel stocks rose by 296,000 barrels last week.
- Diesel demand was off 114,000 bpd last week to 3.6 mbpd.
- Both gas and diesel production fell last week despite an uptick in refinery utilization.
Gasoline
- The EIA reported gasoline stocks fell by 262,000 barrels last week.
- Gasoline demand fell 451,000 bpd last week to 8.8 mbpd.
- Nymex gasoline open interest rose to its highest level since February 2022.
Propane
- Conway is trading at .6350 while Belvieu is trading at .6350.
- Conway is trading at 33% of crude.
- The US is exporting 52% of production as of 8/11/23.
- The EIA reported propane stocks rose by 671,000 barrels last week.
Natural Gas
- Overnight weather runs added 5 CDDs for the two-week forecast.
- Yesterday, US natural gas demand fell to 101.3 Bcf/d.
- The EIA is expected to report a 35 Bcf injection into storage for last week.
Continuous Daily HO: Nearby diesel resisted a move below $3.00 yesterday and is rebounding off the mark today. The 9-day moving average may act as a daily resistance target today, a close above this level can be a short-term bullish indicator. Diesel stocks remain tight which supports an upward trend.
