Outlook: The energy complex is mixed this morning to kick things off with crude managing small gains while refined products fall. Tropical Storm Idalia is in the spotlight this week as the market attempts to measure potential disruptions. The storm is expected to become a hurricane as it makes landfall on the western side of Florida. With the current track, offshore crude and gas production appears more likely to be impacted than refineries. Any shift to the West could change that view quickly. Other headlines this morning have been relatively supportive with China pushing out more stimulus and a significant decline in global crude in floating storage. Surprisingly, hawkish comments from Powell last week were buried in the mix but will be something to keep in mind for bearish risk moving forward. The US dollar is back above 104.000 this morning and continues to trend higher.
Crude
- China cut stamp duty on stock trading in its most recent stimulus effort.
- Markets are tracking Tropical Storm Idalia which could impact oil and gas producers in the Gulf.
- Fed Chair Jerome Powell said higher rates may be needed during his speech at last week's Jackson Hole symposium.
- Energy Aspects expects Saudi Arabia to continue its voluntary 1 million bpd cut into October.
- Global crude in floating storage fell by 23% last week.
- Baker Hughes reported US oil rigs fell by 8 last week.
- Managed money decreased net length by 42k contracts last week.
- As of 7:44 am CST: Brent crude oil up $0.05 to $84.53, US dollar index up $0.042 to 104.117 while the nearby e-mini S&P 500 futures contract is up 19.25 to 4434.00.
Diesel
- The prompt heat crack rallied over $5 last Friday as refinery woes continue. Cracks are retreating to start the week.
- Tropical storm Idalia could impact the eastern portion of the US refinery belt.
Gasoline
- Gasoline cracks rose over $2 last Friday but dipped back under $30 this morning.
- China Petroleum and Chemical Corp expects domestic refined product demand to rise 12.9% y/y for the second half of this year.
Propane
- Conway is trading at .6725 while Belvieu is trading at .6900.
- Conway is trading at 35% of crude.
- The US is exporting 56% of production as of 8/18/23.
Natural Gas
- Overnight weather runs added 8 CDD to the two-week forecast.
- Yesterday, natural gas demand fell to 103.8 Bcf/d.
- Baker Hughes reported US nat gas rigs fell by 2 to 115 last week.
- Chevron LNG workers in Australia have been given the legal right to strike.
- Tropical storm Idalia is expected to miss export facilities in Louisiana and Mississippi but may impact Georgia and South Carolina.
Hurricane Watch: Tropical storm Idalia is expected to make landfall as a category 1 hurricane on the panhandle of Florida. The current path has the storm missing primary refining capacity but may impact the eastern portion of offshore oil and gas rigs. Any precautionary evacuations could be supportive for crude and nat gas.
