Outlook: Energies are taking a weaker tone today and on the week WTI is nearly unchanged while refined products face a weekly decline. Economic struggles in China represented the bearish driver this week and Chinese officials acknowledged that the inconsistent data is making policy decisions difficult. Wildfires continue to spread throughout Canada with additional evacuations being announced today. With half a million barrels per day of oil production within close proximity to the out-of-control blaze, there is a risk that buying pressure develops ahead of the close today to provide coverage over the weekend. Citigroup released a piece forecasting commodity price action under a Trump presidency and is bearish energy. Under this scenario, crude producers should consider hedging production with options into next year with low volatility allowing for cheaper premiums. Please reach out for quotes or strategies for your specific operation.
Crude
- A global cyber outage has grounded flights, hit banks, and caused disruption throughout many industries this morning. (Reuters)
- Chinese officials acknowledged today that “many complex contradictions” point to a bumpy road ahead for implementing policies. (Reuters)
- Wildfires in Canada continue to spread with 500,000 bpd of oil production within 6 miles of the blaze. (BBG)
- Russia’s seaborne crude exports on a 4-week average basis fell to 3.11 mbpd in the first two weeks of July. This is 600,000 bpd below the peak in April. (BBG)
- Several OPEC+ delegates told Reuters the group is unlikely to change output policies when they meet next month. (Reuters)
- LTD for August WTI is 7/22.
- WTI prompt spread traded to a fresh high of $1.65 yesterday.
- Baker Hughes will report rig counts at 12:00 pm CT.
- As of 8:37 am CST: Brent crude oil down $0.79 to $84.32, US dollar index up $0.153 to 104.327 while the nearby e-mini S&P 500 futures contract is down 4.25 to 5590.00.
Diesel
- Exxon Mobil’s 251,000 bpd Joliet, Illinois refinery remains offline due to power outages following the severe weather that impacted the area earlier this week.
- Chicago gasoline and diesel basis moved higher again yesterday after severe weather knocked out power at several refineries in the region.
Gasoline
- AAA reports the national average gas price at $3.50, down 4 cents from last week.
- 4-week average gasoline demand fell 151,000 bpd to 9.1 mbpd last week.
Propane
- Conway is trading at .7575 while Belvieu is trading at .7900.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8050.
- Conway propane is trading at 40% to WTI.
Natural Gas
- Overnight weather runs were unchanged for the two-week forecast.
- Freeport LNG has canceled at least 10 cargoes for loading through August due to outages.
- The EIA reported a 10 Bcf injection into storage last week. Working gas storage sits at 3,209 Bcf while the 5-year average storage for this time period is 2,744 Bcf.
Continuous Daily HO: Diesel has found support at its 50-day moving average this week. Refined products continue to face headwinds with refiners running at elevated rates.
