Outlook: The energy complex is holding a positive tone again today with crude and products all observing gains. Crude will look to scratch out a weekly gain if it can maintain strength while refined products have faced stronger headwinds this week. Crack spreads have remained under pressure this week after hurricane Beryl moved through key refining infrastructure in Texas causing minimal outages. The US dollar is lower again today after a breakout move lower yesterday. This morning’s PPI print certainly caught traders’ attention however after a pretty significant miss in contradiction to CPI yesterday. Jerome Powell expressed confidence that progress was being made in the battle against inflation but there’s no guarantee it will be smooth sailing until that first cut is made. The dollar lifted off its lows following the report and rate cut bets quickly erased some of the confidence built in yesterday. Look for markets to find more definition as the morning progresses today.
Crude
- Chinese crude imports fell by 11% in June y/y, according to import/export data released overnight.
- WTI spreads expanding sharply over the last two sessions reflecting fundamental tightening.
- Baker Hughes will report rig counts at 12:00 pm CT.
- Rumors of a ceasefire framework agreement between Israel and Hamas has been floating around but still lacks the legs to pressure the market.
- US PPI was reported at 3% vs 2.5% est. and 2.3% previous.
- The US dollar has eased earlier losses with the PPI inflationary measure contradicting the CPI print earlier this week.
- Rate cut bets have dropped from 98% for a September to 88% following the PPI print this morning.
- As of 8:06 am CST: Brent crude oil up $0.53 to $85.93, US dollar index down $0.162 to 104.277 while the nearby e-mini S&P 500 futures contract is up 5.25 to 5645.00.
Diesel
- Gasoline and diesel are struggling to keep pace with crude this week.
- Diesel basis values have fallen under pressure across several regions this week.
Gasoline
- AAA reports the national average retail gas price at $3.538 which is nearly even with prices last year at this time.
- 4-week average gasoline demand rose 80,000 bpd last week and sits above 5-year average levels.
Propane
- Conway is trading at .7800 while Belvieu is trading at .8100.
- 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 9 CDDs for the two-week forecast.
- Freeport LNG resumed flows yesterday.
- The EIA reported natural gas stocks rose 65 Bcf last week.
- Natural gas stocks remain 504 Bcf above 5-year average levels.
Continuous Hourly WTI:
