Outlook: Crude and refined products are lower this morning led by headlines of resumed ceasefire talks and export shut-ins in the Gulf. Ceasefire talks will have limited ability to erase risk premium due to numerous failed attempts in the past, but any progress made to prevent further spillover may be well received. Hurricane Beryl is making landfall in Texas causing crude and natural gas export facilities to shut down. The US exported 4.4 mbpd of crude last week and any long-term outages could contribute to inventory builds. Storm impact to refineries in the Gulf is still expected to be minimal and crack spreads are working lower today. Overall weakness this week may also be attributed to trade range resistance. WTI has rejected trade above $84 twice and this may be an upside zone that will require a fresh bullish driver. The big three agencies will release monthly reports this week to provide fresh fundamental influence.
Crude
- Ceasefire talks are underway again this week with discussions being mediated by Qatar and Egypt. (Reuters)
- Hurricane Beryl has made landfall in Texas.
- Ports of Corpus Christi, Houston, Galveston, Freeport, and Texas City closed on Sunday in preparation for the hurricane making landfall. (Reuters)
- Nonfarm payrolls for June were reported at 206k vs 190k est.
- Baker Hughes reported oil rig counts were unchanged at 479 last week.
- French elections revealed a divided political landscape over the weekend with up to 198 seats going to the leftist, 169 seats going to the centrists, and 143 seats going to the RN. (Reuters)
- Iran voters elected moderate Masoud Pezeshkian as president. (Reuters)
- The EIA, IEA, and OPEC will release monthly reports this week.
- As of 8:37 am CST: Brent crude oil down $0.55 to $85.98, US dollar index down $0.048 to 104.827 while the nearby e-mini S&P 500 futures contract is up 11.25 to 5632.00.
Diesel
- Gulf coast refineries are expected to see minimal impact from Hurricane Beryl.
- Prompt diesel futures fell over 3 cents on the extended holiday session through Friday last week and that weakness is carrying over to today.
- Continuous diesel futures are testing support on the 100-day moving average today at $2.5757.
Gasoline
- Prompt RBOB futures fell over 4 cents on the extended holiday session through Friday last week and is down over a penny again today.
- GasBuddy data is suggesting holiday demand last week disappointed which could create a stronger bearish case for the second half of the summer.
- Continuous RBOB futures are trading back below the 100-day and 9-day moving averages today.
Propane
- Conway is trading at .8175 while Belvieu is trading at .8550.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8600.
- Conway propane is trading at 41% to WTI.
Natural Gas
- Overnight weather runs added 6 CDDs for the two-week forecast.
- Freeport LNG has turned down production as a precautionary measure due to Hurricane Beryl.
- 130,000 customers in Texas have already lost power due to the storm.
- Baker Hughes reported nat gas rigs rose by 4 to 101 last week.
Continuous Daily RBOB: Rumors of disappointing holiday demand will be something to look out for in this week’s EIA report.
