Outlook: Energies are lower out of the gate again today as they look to establish a compelling bearish trend for the week. Continuous WTI gapped lower and below the 200-day moving average with the expiration of the August WTI contract yesterday. The prompt crude spread has also stepped back trading near $1 after reaching $1.79 before August came off the board. Ceasefire hopes seem to still be in discussion despite a flurry of attacks over the weekend. President Biden is expected to meet with Israel's Prime Minister to discuss ceasefire details on Thursday if the meeting comes to fruition. Technicals should begin to provide support to the complex after three consecutive sessions lower with oversold indications growing stronger. Fundamentals will also have a say with the EIA reporting inventories tomorrow morning. We continue to monitor bearish developments, but the selloff this week may present a good buying opportunity for those looking for coverage across gas, diesel, and propane.
Crude
- Optimistic reporting on ceasefire talks continues to provide marginal bearish pressure on energies.
- Biden is expected to meet Israeli Prime Minister Benjamin Netanyahu on Thursday at the White House to discuss ceasefire details.
- Continuous WTI gapped lower with the expiration of the August contract yesterday. The gap is between $79.17 and $78.73.
- Canadian Wildfires remain a bullish risk with out-of-control fires within 6 miles of ~380,000 bpd of production.
- Reuters estimates crude stocks fell 2.5 million barrels last week.
- The API will report its inventory survey today after 3:30 pm CT
- As of 8:40 am CST: Brent crude oil down $0.65 to $81.75, US dollar index up $0.172 to 104.486 while the nearby e-mini S&P 500 futures contract is up 4.25 to 5614.00.
Diesel
- Reuters estimates diesel stocks rose 3,000 barrels last week.
- Exxon’s Joliet refinery remains offline with a resumption of service estimated at 3 weeks. Chicago basis values remain strong.
- Russia’s Tuapse oil refinery remains in operation following a Ukrainian drone strike over the weekend.
Gasoline
- Reuters estimates gasoline stocks fell 500,000 barrels last week.
- Russia is restarting its gasoline export ban in August and will consider extending it through September and October.
Propane
- Conway is trading at .7475 while Belvieu is trading at .7800.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7850.
- Conway Swap Oct24 indicative midpoint ~.7725
- Conway propane is trading at 39% to WTI.
Natural Gas
- Overnight weather runs added 3 CDDs for the two-week forecast.
- European gas storage sits at 83% full and well above seasonal norms.
- Reuters estimates nat gas stocks rose between 11 and 24 Bcf last week.
Continuous Daily WTI: Crude is showing oversold levels with a move below its lower Bollinger Band while RSI values suggest further downside may be available with values remaining above 30. Both diesel and gasoline reflect similar conditions.
