Outlook: Energies are mixed to start the day with crude lower and products higher. WTI has found resistance at the $88 mark and will likely need a fresh driver to make its run for $90 as it tips into overbought territory. Refined products remain fundamentally tight and susceptible to further unplanned refinery issues. We are over the hump for hurricane season and currently, no tropical disturbances are threatening the Gulf. Group 3 gasoline basis is off its highs from last week but remains elevated and is being reflected at the pump throughout the region. Chicago diesel basis is falling sharply once again and may present opportunities for those that have available storage. The macroeconomic scene look quiet today and tomorrow but US inflation will be reported on Wednesday to provide influence.
Crude
- Global crude in floating storage fell 5.8% last week and to its lowest level this year at 81.02 million barrels, according to Vortexa.
- The number of supertankers scheduled to arrive in China fell to its lowest level in 6 months.
- Russia’s crude processing fell by 32,000 bpd in the first 6 days of Sep compared to August.
- Saudi Arabia’s contractual volumes to Asia fell by 2 million barrels from Oct to Sep.
- Libya’s main oil ports have been shut in due to a hurricane. The shutdown is expected to last two days.
- There are no tropical storm threats tracking for the Gulf currently with peak season being surpassed this weekend.
- Baker Hughes reported US oil rigs rose by 1 to 513 last week.
- As of 8:05 am CST: Brent crude oil down $0.07 to $90.58, US dollar index down $0.414 to 104.677 while the nearby e-mini S&P 500 futures contract is down 26.25 to 4488.00.
Diesel
- Last week’s COT report showed ULSD managed money traders reduced their net length by 737 positions to a net long 36,817.
- Prompt diesel put in a fresh multi-month high today as it trades through $3.34.
- Chicago diesel basis fell sharply last week to -41.5 cents. Filling storage at favorable basis levels can be hedged by selling futures to remain long basis.
- Group 3 diesel basis softened last week closing at -3.5c.
Gasoline
- Last week’s COT report showed RBOB managed money traders reduced their net length by 3,188 contracts to a net long 64,131.
- Group 3 gasoline basis remains elevated, closing at +45.75c last Friday. Pump prices have jumped sharply over the last several days in response.
Propane
- Conway is trading at .7525 while Belvieu is trading at .7575.
- Conway is trading at 36% of WTI.
- The US is exporting 63% of production as of 9/1/23.
Natural Gas
- Overnight weather runs added 1 CDD through the two-week forecast.
- Yesterday, natural gas demand fell to 101.9 Bcf/d.
- Baker Hughes reported US gas rigs fell by 1 to 113 last week.
- Australian LNG strikes are pressuring TTF which is up another 6% today.
Continuous Daily WTI: Overbought conditions can occasionally provoke a selloff. Crude has found comfort between $86 and $88 over the last several sessions and may be considered a range of support and resistance.
