Outlook: The energy complex is again mixed to start the morning with crude higher and products lower. Hurricane Idalia will make landfall in Florida today and continues to strengthen. A near miss for Gulf Coast energy infrastructure has the market acting accordingly. As storm talk comes to pass, the focus may again shift toward fundamental data and economic reports. Global crude stocks have been on the decline and with Saudi Arabia expected to extend cuts through October, may fall even further toward year-end. Fed Fund Futures have seen an uptick in projections for an additional rate hike before year-end following Powell's speech last Friday. JOLTS jobs and Consumer Confidence will be released this morning and China’s Manufacturing PMI will be released tomorrow night. The US dollar is on the rise again this morning which is a bearish element for dollar-based commodities.
Crude
- Russia’s seaborne crude exports rose to their highest level in 8 weeks at 3.4 mbpd.
- A Bloomberg survey estimates Saudi Arabia will once again increase its Arab Light selling price for October sales to Asia.
- China’s largest state banks are preparing to cut interest rates on outstanding mortgages and deposits, per Bloomberg.
- The US SPR rose by 600,000 barrels last week.
- Reuters estimates crude stocks fell by 2.9 million barrels last week.
- The API will report its inventory survey today at 3:30 CT.
- Hurricane Idalia will make landfall today.
- As of 7:47 am CST: Brent crude oil up $0.60 to $85.02, US dollar index up $0.203 to 104.262 while the nearby e-mini S&P 500 futures contract is down 3.25 to 4439.00.
Diesel
- Refiners' cost to comply with Renewable Fuel Standards rose to around 38% of crack spreads in 2023, according to Bloomberg.
- Marathon began to restart units at its 596,000 bpd Garyville, Louisiana refinery following the fires on several storage units last Friday.
- Reuters estimates diesel stocks rose by 100,000 barrels last week.
Gasoline
- Reuters estimates gasoline stocks fell by 1.4 million barrels last week.
- Gulf Coast gasoline basis is trading at a 5-year high at +5.50c.
Propane
- Conway is trading at .6675 while Belvieu is trading at .6850.
- 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 2 CDD to the two-week forecast.
- Yesterday, natural gas demand fell to 100.1 Bcf/d.
- Chevron LNG workers in Australia may begin incremental strikes next week.
- Tropical storm Idalia is expected to miss export facilities in Louisiana and Mississippi but may impact Georgia and South Carolina.
Hurricane Watch: It's looking like a near miss for oil and gas in the Gulf as illustrated in the image below. Demand will still likely be impacted depending on the severity of the storm with a run on supplies ahead of the storm followed by potential short-term demand destruction. Tropical disturbance chances continue to repopulate with the season in full swing.
