Outlook: Momentum looks to continue in the energy space today with crude and refined products finding a bid. A strong finish yesterday for energies looked to be a breakout move allowing for further gains this morning. A combination of geopolitical risk premium and storm premium are providing fuel this week and bearish elements have been relatively absent to keep a lid on prices. A few weather models are showing an increased, yet marginal chance Beryl could slide north to clip offshore US production but the overall severity of the storm likely has traders looking for coverage. Several OPEC members are seen to be overproducing in June relative to recent quotas, according to surveys released by both Bloomberg and Reuters this week. Iraq produced 4.15 mbpd of crude in June, down 50,000 bpd from May, but 141,000 bpd above its OPEC quota per the Reuters poll. This could be viewed as bullish if Iraq continues to work toward compliance in Q3. The EIA will report inventories at its usual time on Wednesday ahead of the holiday on Thursday. The API will release its survey this afternoon at 3:30 pm CT.
Crude
- OPEC crude production was lower by 80,000 bpd to ~27 mbpd in June, according to a Bloomberg survey released yesterday.
- Around 20 ships loaded oil on Canada’s West Coast following the first full month of the new TMX operation, which was 2 lower than expected. (Reuters)
- Asia imported 27.16 mbpd of crude from January to June, down 130,000 bpd from 27.29 mbpd in 2023, according to LSEG Oil Research.
- China’s oil imports totaled 11.08 mbpd through the first six months, down 300,000 bpd from 2023. (Reuters)
- Hurricane Beryl poses a risk to offshore oil and gas production, however, the most probable path would miss to the south.
- Reuters estimates crude stocks fell 200,000 barrels last week.
- The API will report its inventory survey at 3:30 pm CT.
- US ISM manufacturing data reflected sharper than expected contraction yesterday.
- As of 7:52 am CST: Brent crude oil up $0.84 to $87.44, US dollar index down $0.039 to 105.861 while the nearby e-mini S&P 500 futures contract is down 25.25 to 5508.00.
Diesel
- Reuters estimates diesel stocks fell 1.1 million barrels last week.
- Continuous Daily HO closed above its 100-day moving average yesterday for the first time since early April.
- The 200-day moving average sits at $2.7243.
Gasoline
- AAA forecasts holiday travel this week will be 5.2% higher than 2023 with car travel up 4.8%.
- Reuters estimates gasoline stocks fell 1.5 million barrels last week.
Propane
- Conway is trading at .8075 while Belvieu is trading at .8550.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8550.
- Conway propane is trading at 41% to WTI.
Natural Gas
- Overnight weather runs removed 6.5 CDDs for the two-week forecast.
- Reuters estimates natural gas stocks fell 22 to 35 Bcf.
- European gas inventories were reported at 77% to start the week, up from the 5-year seasonal average of 67%.
Continuous Daily HO: Two days of strong gains has diesel futures beginning to tip overbought. The prompt contract is challenging the upper Bollinger along with nearing an RSI value above 70.
