Outlook: Energies are making a firm move lower with crude down over a dollar and refined products down around 4 cents out of the gate. Natural gas is looking for life trading up 4 cents but the outlook remains bleak with cooler weather continuing to populate in the deferred forecast. Refined products have outpaced crude to the downside with refinery runs remaining high. Fears of slowing in China’s economy is likely weighing on markets for a second consecutive day. China is the largest global oil demand growth driver in many projections and underperformance could impact whether the fundamental balance shifts from a deficit to a surplus. The Fed grows more optimistic that rate cuts are around the corner, but bearish drivers appear to carry more weight with prices pulling back from the upper end of recent trade ranges. Several technical breakdowns will be worth keeping an eye on today with further downside possible if current losses remain intact.
Crude
- The US destroyed five Houthi UAVBs in the Red Sea yesterday after the Houthis attacked two vessels, one being an oil tanker. (BBG)
- Fears of a slowdown in China are weighing on energies this week.
- The Fed continues to shed more optimism that rate cuts are on the horizon which should stimulate the economy and support demand.
- Chinese imports of Iranian oil rose to 1.5 mbpd in June, up 148 kbpd from May. (BBG)
- Continuous WTI is trading back below its 100-day moving average today.
- Reuters estimates crude stocks rose 1 million barrels last week.
- 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
- Reuters estimates diesel stocks fell 500,000 barrels last week.
- Continuous diesel futures are testing support at the 50-day moving average of $2.4680 today.
- Diesel sales in France fell 13% y/y in June. (BBG)
Gasoline
- Reuters estimates gasoline stocks fell 1.7 million barrels last week.
- Continuous RBOB futures are testing support of the 50-day moving average at $2.4881 today.
- Gasoline sales in France fell by 4.7% y/y in June. (BBG)
Propane
- Conway is trading at .7700 while Belvieu is trading at .7975.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8150.
- Conway propane is trading at 40% to WTI.
Natural Gas
- Overnight weather runs removed 2.5 CDDs for the two-week forecast.
- Freeport LNG will be operating at reduced rates as it restarts trains this week due to damage from Hurricane Beryl.
- Reuters estimates nat gas stocks rose between 12-30 Bcf last week.
Continuous Daily WTI: A close below the 100-day moving average today could invite a test of the 50 & 100 day moving averages just above $79.
