Outlook: The energy complex is lower across the board this morning with natural gas observing the steepest losses down nearly 5%. Further complications at Freeport LNG have halted feedgas flows and cooler weather revisions in the extended forecast have induced another round of selling. A strong inventory surplus for natural gas has the market vulnerable to further downside pressure. Oil and refined products are finding pressure from negative economic data out of China overnight. China’s GDP for Q2 was reported at 4.7% vs 5.1% est. and 5.3% last, marking its slowest growth in over a year. Chinese oil imports and refined product output also showed declines on a year-over-year basis to add to bearish sentiment. Traders may want to see a broader fundamental shift from the forecasted deficits this year before taking a longer-term bearish stance on Chinese underperformance alone. Look for rangebound activity to resume with Crude trading between $80-$85 until a fresh catalyst develops.
Crude
- China’s GDP grew at the smallest level in over a year in Q2.
- China’s crude oil imports fell 11% y/y in June while 1H imports trail 2.3% y/y. (Reuters)
- Iraq’s oil ministry stated again over the weekend that it will compensate for overproduction since the beginning of 2024.
- Baker Hughes reported oil rig fell by 1 to 443. Oil rig counts are lower by 11 m/m and down 59 y/y.
- Fed Chair Jerome Powell will speak today at 11:30 am CT.
- Equities are higher along with the dollar after former President Trump was shot during a rally in Pennsylvania on Saturday.
- As of 8:50 am CST: Brent crude oil down $0.44 to $84.59, US dollar index up $0.010 to 104.095 while the nearby e-mini S&P 500 futures contract is up 20.25 to 5685.00.
Diesel
- China’s refinery output fell 3.7% to a six-month low in June. (Reuters)
- Nymex HO net length rose by 6.6k lots last week.
Gasoline
- Russia may reinstate the gasoline export ban in August if shortages worsen, according to their deputy prime minister. (Reuters)
- Nymex RBOB net length rose by 5.2k lots last week.
Propane
- Conway is trading at .7850 while Belvieu is trading at .8125.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8250.
- Conway propane is trading at 41% to WTI.
Natural Gas
- Overnight weather runs removed 8 CDDs for the two-week forecast.
- Freeport LNG has again halted flows due to complications following Hurricane Beryl.
- Baker Hughes reported nat gas rigs fell by 1 to 100 last week.
Continuous Daily RBOB: Prompt RBOB futures are testing support at the 50-day moving average today. A close below would be a bearish technical indication. Refined products may face downside pressure as retailers destock following the holidays.
