Outlook: Energies markets are mostly positive this morning with crude and gas higher while diesel hovers near even. China’s manufacturing PMI showed further contraction in the industry but came in above estimates. Non-manufacturing PMI showed expansion but smaller-than-expected. Additional manufacturing data will be reported tonight to provide influence. Russia’s oil exports fell in August providing support, however, India’s imports declined in opposition. India’s oil demand has slowed due to the monsoon season, but a rebound is expected through the end of the year. With global stocks already on the decline, an uptick in demand could create an even tighter environment assuming OPEC+ cuts remain in place. The trend in energy remains higher and will likely remain until a compelling bearish driver develops.
Crude
- Russian oil exports fell to 2.3 mbpd in August, down 250 kbpd from July.
- India bought less Russian oil in August due to the Monsoon season. India’s overall crude imports fell to 4.35 mbpd in August.
- Civil unrest in Gabon still poses a risk to oil exports, however, no disruptions have yet been reported.
- China’s Manufacturing PMI came in higher than expected at 49.7 vs 49.4 est.
- The EIA reported US crude stocks fell by 10.5 million barrels last week.
- US crude stocks sit 34.7 million barrels below 5-year average levels.
- US Core PCE inflation rose as expected at 4.2% for July.
- US nonfarm payrolls will be reported tomorrow morning at 7:30 am CT.
- As of 8:19 am CST: Brent crude oil up $0.84 to $86.70, US dollar index up $0.455 to 103.612 while the nearby e-mini S&P 500 futures contract is up 3.25 to 4528.00.
Diesel
- The EIA reported US diesel stocks rose by 1.2 million barrels last week.
- Padd2 refinery utilization rose to 100.7% last.
- Russia’s diesel and gasoil exports fell to 1.05 mbpd, lowest since May.
- Today is LTD for September ULSD.
Gasoline
- The EIA reported US gasoline stocks fell by 214,000 barrels last week.
- Gasoline demand rose by 158,000 bpd last week to 9.068 mbpd.
- Today is LTD for September RBOB.
Propane
- Conway is trading at .6750 while Belvieu is trading at .6850.
- Conway is trading at 35% of crude.
- The US is exporting 61% of production as of 8/25/23.
- The EIA reported US propane stocks rose by 3.1 million barrels last week.
- US propane stocks are 47.5 million barrels above 5-year average levels.
Natural Gas
- Overnight weather runs were unchanged through the two-week forecast.
- Yesterday, natural gas demand fell to 100.4 Bcf/d.
- Chevron LNG workers in Australia may begin incremental strikes next week.
- The EIA is expected to report a 30 Bcf injection into storage for last week.
- The 5-year average injection is 51 Bcf.
Crude Inventories: Crude stocks have declined for 3 consecutive weeks. Crude supplies have come under pressure this year amidst ongoing OPEC+ cuts which have carved out a supply deficit relative to demand. Global crude supplies are following a similar trend and Saudi Arabia is expected to extend their voluntary cut through October.
