Outlook: Energies are on the run today with crude and refined products holding convincing gains. With the rally this week, prices across the board have worked back into the trading range that was observed throughout May and could soon find resistance as they reach May highs. The market is drafting support from a bullish API survey released yesterday afternoon late in the trading session and a bullish CPI print this morning. On the fundamental front, the large forecasted draw in gasoline stocks could be supportive to gasoline demand which has remained lackluster to start summer. The EIA will look to confirm data later this morning with demand certainly being an area of focus. The favorable inflation reading today is providing optimism for interest rate cuts this year. September is looking like the pivot month for the first potential cut which is priced at 62% today vs 46% yesterday following the CPI release. Easing interest rates would be a bullish driver for energies heading into the second half of 2024.
Crude
- The IEA released its monthly report today, which lowered 2024 oil demand growth 100,000 bpd to 960,000 bpd. This leaves the IEA as the least bullish of the big 3 for 2024 demand growth.
- The IEA forecasts global oil demand growth will peak in 2029, which is earlier than most industry estimates which fall at 2030 or later.
- The EIA forecasts US crude production will average 13.24 mbpd in 2024 and 13.71 mbpd in 2025.
- US headline CPI and core CPI came in slightly better than expected which has lent support to outside markets and energies today.
- The Fed will meet today and is expected to leave interest rates unchanged.
- Reuters estimates crude stocks fell 1 million barrels last week.
- The API survey showed crude stocks fell 2.4 million barrels last week.
- The EIA will report inventories at 9:30 am CT.
- As of 8:20 am CST: Brent crude oil up $1.26 to $83.18, US dollar index down $0.754 to 104.476 while the nearby e-mini S&P 500 futures contract is up 47.25 to 5431.00.
Diesel
- Reuters estimates diesel stocks rose 1.6 million barrels last week.
- The API survey showed diesel stocks rose 1 million barrels last week.
- Diesel futures sit in Contango through the November contract before flipping back to backwardation in 2025.
Gasoline
- Reuters estimates gasoline stocks rose 900,000 barrels last week.
- The API survey showed gasoline fell 2.5 million barrels last week.
Propane
- Conway is trading at .7250 while Belvieu is trading at .7525.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7900.
- Conway propane is trading at 39% to WTI.
- OPIS estimates propane stocks rose 2.4 million barrels last week.
Natural Gas
- Overnight weather runs were unchanged for the two-week forecast.
- FERC granted permission for the 2 Bcf/d Mountain Valley pipeline to begin service yesterday.
- Reuters estimates nat gas stocks rose between 76 and 88 Bcf last week.
Continuous Daily WTI: With another strong move today crude is creeping up toward its 100-day moving average. The 200-day is 30 cents higher and the two combined may present convincing resistance before a test of $80
