Outlook: Energies look to maintain momentum today with crude up over a dollar and diesel up 4 cents. The fundamental projections yesterday afternoon weren’t necessarily supportive with crude expected to build vs a Reuters estimate for a draw. Both gasoline and diesel stocks are expected to also see builds when the EIA reports later this morning. If builds are supported by soft demand readings, momentum could fade quickly. Macroeconomic reports lean positive so far this morning with German and British inflation cooling, which follows the broader sentiment of unwinding interest rates sooner than expected. US consumer confidence will be reported at 9:00 am CT for the last report of the day. Expect trade to thin quickly for the rest of the week as traders take off for the holiday weekend. Thin trade can leave the market susceptible to volatile swings if a significant market driver develops and it’s important to keep DPRs tight during these windows.
Crude
- The US bought 2.1 million barrels of crude from February delivery with an average price around $74.50 yesterday.
- Both German and British inflation cooled more than expected last month.
- Political implications from US actions in the Red Sea is an upside risk for energy.
- A close above $75 for WTI today could provide psychological support for the rest of the week.
- Reuters estimates crude stocks fell by 2.3 million barrels last week.
- The API survey showed crude stocks rose by 900,000 barrels last week.
- The EIA will report inventories at 9:30 am CT.
- As of 8:01 am CST: Brent crude oil up $1.02 to $80.25, US dollar index up $0.102 to 102.269 while the nearby e-mini S&P 500 futures contract is down 11.25 to 4808.00.
Diesel
- Prompt HO futures are nearing resistance at the 200-day moving average at $2.7751
- Reuters estimates diesel stocks rose by 0.5 million barrels last week.
- The API survey showed diesel stocks rose by 2.7 million barrels last week.
Gasoline
- Prompt RBOB futures closed above its 50-day moving average yesterday.
- Reuters estimates gasoline stocks rose by 1.2 million barrels last week.
- The API survey showed gasoline stocks rose by 0.7 million barrels last week.
Propane
- Conway is trading at .6275 while Belvieu is trading at .6775.
- Conway Swap Oct24-Mar25 strip trading ~.7200.
- OPIS estimates propane stocks fell by 1.5 million barrels last week.
Natural Gas
- Overnight weather runs removed 3 HDDs through the two-week forecast.
- Record-breaking high temperatures are expected throughout the Midwest over the next 7 days.
- Reuters estimates natural gas stocks fell between 70-75 Bcf last week.
Continuous Daily ULSD: Diesel is approaching potential resistance at its 200-day moving average. Trendline support will also reinforce this level. A successful challenge would set the 50-day moving average for the next upside target.
