Outlook: The energy complex is mixed to start the week with products looking for direction while crude is up over a dollar. Crude has struggled to break out after coming up short of $85 a little over a week ago and gasoline remains under pressure as summer winds down. Diesel remains the strong leg and may have room to keep moving higher if headwinds remain light this week. Diesel stocks remain tightest of the bunch and reports of LNG strikes developing in Australia could support some switching from natural gas to diesel for winter heating. The tropical storm outlook has heated up with 4 active storms in the Atlantic. There remains a significant threat of a major storm impacting the Gulf this season.
Crude
- Global crude in floating storage fell by 7% w/w.
- Asian-Pacific crude stocks fell by 15% last week and hit their lowest levels since March.
- Chinese oil imports were up 17.1% y/y in July but down 16.1% m/m.
- Saudi Crude shipments to China fell 31% in July from June.
- There are 4 active tropical storms in the Atlantic right now.
- Bakers Hughes reported US rig counts fell by 5 last week to 520.
- Last week’s COT report showed crude oil managed money traders net sold 31,338 contracts and are net long 178,820 contracts.
- As of 8:00 am CST: Brent crude oil up $0.92 to $85.72, US dollar index down $0.124 to 103.249 while the nearby e-mini S&P 500 futures contract is up 12.25 to 4395.00.
Diesel
- Last week’s COT report showed HO managed money traders net sold 656 contracts and are net long 32,867 contracts.
- Looks for $3.2310 to act as resistance this week, represented by the recent high on August 10th.
Gasoline
- Last week’s COT report showed RBOB managed money traders net bought 5,503 contracts and are net long 74,173 contracts.
- RBOB gas continued to lag behind the complex but could be supported by strong demand through Labor Day weekend.
Propane
- Conway is trading at .6350 while Belvieu is trading at .6425.
- Conway is trading at 33% of crude.
- The US is exporting 52% of production as of 8/11/23.
Natural Gas
- Overnight weather runs were unchanged for the two-week forecast.
- Yesterday, US natural gas demand fell to 100.2 Bcf/d.
- Baker Hughes reported nat gas rigs fell by 6 to 117 last week.
- Woodside Energy Group, a major LNG export in Australia, may face strikes as early as Sep 2nd.
Continuous Daily HO: The diesel complex is looking positive to start the week and may look to set fresh highs. Look for the high on August 10th to act as resistance if strength persists throughout the week. The contract is very close to overbought on a 14-day RSI with a value of 68.5.
