Outlook: Energy markets are pushing higher this morning following a relatively unchanged unofficial shortened session yesterday. Today is last trade day for July WTI and the August contract will look to become the prompt tomorrow at roughly a 95-cent discount to the July. Backwardation in the crude markets has risen this week as traders weigh supply risks with the ongoing turbulence in the Middle East. Insurance premiums in the Red Sea have also been on the rise again this week after the Houthis sunk another ship on Tuesday. Refined products are also drafting support this week riding both demand growth anticipation and supply risk. Ukrainian drone strikes on Russian refineries have increased this week, however, Russia has stated they intend to keep exporting gasoline as long as stocks remain healthy. The EIA will give further insight on US inventories today at 10:00 am CT. Industry estimates are fairly mixed for last week which may limit the surprise element.
Crude
- Russia’s four-week average crude exports have risen for two consecutive weeks despite Russia’s pledge to comply with OPEC+ voluntary cuts.
- Chinese oil imports from Russia have fallen to a 7-month low as purchases shift toward Saudi Arabia and Venezuela.
- Geopolitical risk premium is holding strong following the sinking of a coal-carrier in the Red by a Houthi sea drone earlier this week.
- Today is LTD for July WTI.
- Reuters estimates crude stocks fell 2.2 million barrels last week.
- The API survey showed crude stocks rose 2.3 million barrels last week.
- The EIA will report inventories at 10:00 am CT.
- As of 8:13 am CST: Brent crude oil up $0.63 to $85.70, US dollar index up $0.247 to 105.501 while the nearby e-mini S&P 500 futures contract is up 10.25 to 5501.00.
Diesel
- The API survey showed diesel stocks rose 500,000 barrels last week.
- Reuters estimates diesel stocks rose 300,000 barrels last week.
- BP Plc has scaled back plans for biofuels production at its Cherry Point refinery in the US and its Lingen plant in Germany. (BBG)
Gasoline
- The API survey showed gasoline stocks fell 1.1 million barrels last week.
- Reuters estimates gasoline stocks rose 1.5 million barrels last week.
- A record 71 million Americans are expected to travel over the Independence Day holiday window next month. (BBG) Gasoline demand has yet to show a strong shift in the demand trend.
Propane
- Conway is trading at .7475 while Belvieu is trading at .7850.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8100.
- Conway propane is trading at 39% to WTI.
- OPIS estimates propane stocks rose 2.2 million barrels last week.
Natural Gas
- Overnight weather runs removed 1 CDDs for the two-week forecast.
- European LNG imports have totaled 21.3mm mt since the start of summer which is down from 29.7mm mt last year during this period.
- The EIA will report inventories at 9:30 am CT.
- Reuters estimates nat gas stocks rose between 66 and 80 Bcf
Global Oil Demand Growth Forecasts: Both the IEA and EIA have actively revised their growth forecasts each month this year, while OPEC has left their forecast unchanged and by far the most bullish of the bunch. OPEC is relying heavily on Chinese oil demand growth for their forecast to come to fruition.
