Outlook: Energies are starting the week with marginal strength as they crawl out of the hole developed from last week’s lows. The slate for market drivers is jam-packed this week with the Fed meeting, CPI and PPI data, and monthly fundamental reports from the EIA, IEA, and OPEC. Goldman Sachs, along with several other sources remain optimistic about energy prices heading into Q3. They also forecast a range between $90 and $75 for Brent which would translate to around $85 - $70 for WTI. Forecasted inventory draws are expected to provide optimism and large declines in net length from the hedge funds last week should leave room for speculative buying with the right fuel. Further downside risk remains with economic pressures throttling demand and the broader trend should be taken into consideration with hedging decisions. Natural gas prices are surging again this week trading up nearly 15 cents today following a 33 cent gain last week. A warm forecast is expected to drive cooling demand and chip away at surplus inventories.
Crude
- Goldman Sachs sees a $90 ceiling and $75 floor for Brent Crude and expects Brent to rise to $86 in Q3.
- Brent-WTI is trading at $4.45.
- UBS believes the market is positioned overly pessimistic with larger inventory declines expected over the next few weeks.
- Crude oil in floating storage fell by 19% last week. (BBG)
- OPEC will release its monthly report tomorrow Tuesday morning.
- Lyondell Houston Refinery put a unit on circulation after an upset on Sunday. The refinery has a capacity of 264,000 bpd. (BBG)
- Prompt WTI is trading back above its 9-day moving average today.
- Money managers posted the biggest-ever weekly reduction in net-long positions for ICE Brent last week.
- Baker Hughes reported US oil rigs fell by 4 last week to 492.
- As of 8:38 am CST: Brent crude oil up $0.46 to $80.08, US dollar index up $0.460 to 105.345 while the nearby e-mini S&P 500 futures contract is down 12.25 to 5343.00.
Diesel
- Prompt continuous HO is trading above its 9-day moving average today.
- Nymex heating oil net length fell by 15.7 lots last week back to a net short position.
Gasoline
- Prompt continuous RBOB futures are trading above its 9-day moving average.
- Nymex RBOB net length fell by 6.3k lots last week.
Propane
- Conway is trading at .6875 while Belvieu is trading at .7075.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7550.
- Conway propane is trading at 39% to WTI.
Natural Gas
- Overnight weather runs added 2.5 CDDs to the two-week forecast.
- Natural gas futures rose 33 cents last week and are up over 10 cents to start this week.
- Baker Hughes reported nat gas rigs fell by 2 to 98.
Continuous Daily NG: Natural gas leads energies higher today as it extends its bull run from last week.
