Outlook: The energy complex is mixed this morning with crude and diesel working higher while gasoline lags lower. Gasoline continues to fall under pressure which made be the result of long liquidation and summer premium coming out of the market. The overall trend was in jeopardy this week with China woes and a slightly hawkish lean from the Fed pressuring markets. China’s willingness to push out stimulus measures will likely limit the downside momentum from any bearish economic data which is likely what we saw this week. Demand will be closely monitored across countries undergoing economic tightening and as long as fundamentals remain tight, the uptrend may continue to be supported. Keep an eye on the tropical storm activity that may threaten the Gulf, weather models have shown an increase in development chances over the next 7 days.
- Oil is on pace to close the week lower for the first time in 7 weeks.
- Saudi Arabia’s oil exports for the first half of August fell below the 6 mbpd mark for the first time since June 2021, according to Vortexa.
- Citigroup is advising traders to short oil and oil products after summer, citing an end to the recent rally.
- China pulled from its oil storage for the first time in 33 months this week.
- Brazil has imported a record volume of Russian crude so far this month, totaling 235,000 bpd, according to Bloomberg.
- US Treasury yields hit their highest level in 10 years after the FOMC minutes were released this week. The 30-year yield hit its highest level in 21 years at 7.09%.
- As of 8:43 am CST: Brent crude oil up $0.09 to $84.21, US dollar index down $0.050 to 103.522 while the nearby e-mini S&P 500 futures contract is down 18.25 to 4367.00.
- China’s diesel exports tripled in July, totaling 219,000 bpd, according to Bloomberg.
- AAA reports the national average retail diesel price at $4.347, up from $4.269 last week.
- AAA reports the national average retail gas price at $3.873, up from $3.841 last week.
- Portland basis levels have risen sharply this week due to a combination of stock draws, maintenance disrupting supply, and hurricane fears.
- 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.
- Overnight weather runs removed 2 CDDs for the two-week forecast.
- Yesterday, US natural gas demand rose to 102.6 Bcf/d.
- The EIA reported an injection of 25 Bcf for last week.
- Working gas inventories are 549 Bcf above last year and 299 Bcf above the 5-year average.
Tropical Storm Outlook: The 7-day outlook is heating up with the chance of a tropical disturbance increasing. A tropical storm or hurricane in the Gulf can be a volatile event for energies, pleach reach out for strategies on how to manage these events. It’s important to be proactive for disturbances such as hurricanes.