Outlook: Energies failed to hold momentum this morning after a friendly inflation print pushed the US dollar sharply which briefly supported the complex. Both core and headline inflation rose less than expected in June which should increase the Fed’s comfort in lowering interest rates this year. A lower interest rate environment would be supportive of energy demand. Jerome Powell mentioned the progress being made in his testimony to Congress over the last two days but fell short of committing to an interest cut this year. On the fundamental front, the IEA released its monthly report this morning with surprised some with a lower revision of its 2025 global oil demand forecast. The EIA has made higher revisions in its monthly report just two days prior while OPEC left its forecast unchanged yesterday. The IEA remains the least bullish of the three projecting less than 1 mbpd of oil demand growth over the next two years.
Crude
- Fed Chair Jerome Powell did not comment on the specific timing of the first interest rate cut but did note progress toward their goal which was received positively.
- The IEA released its monthly report which left 2024 oil demand growth unchanged at 970,000 bpd but lowered 2025 by 0,000 bpd to 980,000 bpd.
- Two ports in Houston have been unable to receive tankers due to damaged communication systems from Hurricane Beryl. (BBG)
- The US Department of Energy is soliciting offers to buy 4.6 million barrels of oil for the SPR.
- The EIA reported US crude stocks fell 3.4 million barrels last week.
- US crude production rose 100,000 bpd to 13.3 mbpd last week.
- US June CPI was reported at 3% y/y vs 3.1% est. and 3.3% previous.
- US June Core CPI was reported at 3.3% vs 3.4% est. and 3.4% previous.
- As of 8:38 am CST: Brent crude oil down $0.24 to $84.86, US dollar index down $0.760 to 104.288 while the nearby e-mini S&P 500 futures contract is down 2.25 to 5686.00.
Diesel
- The EIA reported diesel stocks fell 4.8 million barrels last week.
- US diesel exports fell 35.3% last week to 1.1 mbpd.
Gasoline
- The EIA reported gasoline stocks fell 2 million barrels last week.
- 4-week average gasoline demand rose 80,000 bpd last week and sits above 5-year average levels.
Propane
- Conway is trading at .7825 while Belvieu is trading at .8125.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8250.
- Conway propane is trading at 41% to WTI.
- The EIA reported propane stocks rose 2.1 million barrels last week which fell between most industry estimates.
- US propane stocks remain 8.2 million barrels above 5-year average levels.
Natural Gas
- Overnight weather runs removed 3 CDDs for the two-week forecast.
- Freeport LNG remains offline for the fourth consecutive day as workers attempt to restore electricity to the export facility. (Reuters)
- Reuters estimates natural gas stocks rose between 49 and 55 Bcf last week.
- The EIA will report inventories at 9:30 am CT.
Continuous Daily RBOB: Gasoline futures are testing support at the 50-day moving average for the second consecutive day. A close below this level would be a bearish technical indication.
