Outlook: The energy complex is trading lower this morning for the third straight day as disappointing economic news out of China continues to be the main focus. A Reuters poll shared yesterday showed China’s manufacturing activity likely shrank for a third month in July. Chinese leaders pledged to increase stimulus measures by targeting consumers and enhancing their ability and willingness to spend. The government stressed that it is necessary to focus on boosting consumption to expand domestic demand. According to Goldman Sachs, Chinese crude imports fell 2.3% year-over-year in the first 6 months of 2024, the biggest half-year drop outside of Covid. Bloomberg forecasts that Chinese crude imports will remain flat for the remainder of 2024. The National Weather Service is tracking a system that currently has a 60% chance of developing into a tropical storm before approaching the U.S. in early August.
Propane prices have fallen a bit over the last few weeks but historically firm up heading into August in anticipation of fall harvest demand. These are still good prices to lock in any fall/winter propane needs.
Crude
- OPEC+ will hold an online joint ministerial monitoring committee meeting on Thursday to review the market and discuss unwinding production cuts beginning in October.
- WTI crude futures settled yesterday at the lowest price since June 7.
- WTI crude futures are now trading below all major moving averages, and the 9-day is trading below all other major moving averages.
- The WTI crude futures 12-month calendar spread has narrowed to 4.93 this morning, the flattest backwardation since June 13 as supply concerns have dissipated.
- The stochastic technical indicator signals crude futures are extremely oversold.
- The Federal Reserve is expected to leave interest rates unchanged at their policy meeting that ends tomorrow, however, the expectation remains for a rate cut at the September 17-18 meeting.
- Oil majors started reporting their Q2 earnings, with some showing profit reductions from weaker refining margins.
- JOLTS jobs data will be released today at 9:00 AM CST.
- As of 8:45 am CST: Brent crude oil down $0.93 to $78.85, US dollar index up $0.121 to 104.435 while the nearby e-mini S&P 500 futures contract is up 20.00 at 5523.00.
Diesel
- Diesel futures settled at the lowest level yesterday since June 7.
- Diesel futures are trading below all major moving averages and the 9-day is trading below all other major moving averages.
- The stochastic technical indicator signals that diesel has been near the most oversold level in the past few years.
Gasoline
- Gasoline futures are being supported by the 200-day moving average.
- Gasoline futures are in oversold territory according to stochastic technical indicator.
- Gasoline demand last week was the highest EIA posting this year, 6% above the five-year seasonal average.
Propane
- Conway is trading at .7425 while Belvieu is trading at .7800.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7750.
- Conway propane is trading at 43% to WTI.
Natural Gas
- Natural gas futures dipped below $2 yesterday for the first time since May 2.
- Temperatures are forecasted to be above the 10-year average through August 12th after relatively average temperatures in July.
- Russian LNG supplies to Europe have increased and are nearly even with the U.S., despite the ongoing conflict in Ukraine.
