Outlook: Economic concerns are the clear driving force to kick the week off with equities and commodities taking a hit. Japan’s stock market saw its worst day since Black Monday while many US equities have fallen to multi-month lows in just two sessions. Analysts fear the Fed may be behind the curve with interest rate cuts and the economy may be at a greater risk of faltering. While energies are feeling the pressure, bullish elements have developed to help values lift off their morning lows. Escalations in the Middle East, Libya’s largest oilfield halting production, and Saudi Arabia raising prices to Asia are all bullish considerations today. Hurricane Debby missed key energy infrastructure as it strengthened making landfall in northwest Florida but another potential storm has popped up right behind it. From a hedging perspective, these selloffs present a good opportunity to cover any short positions. The market should find more clarity as the dust settles today.
Crude
- A broader market selloff is impacting energies today.
- Israel is preparing for a retaliatory strike from Iran this week.
- Rate cut bets continue to accelerate in favor of cuts following poor labor data last Friday which stoked recessionary fears.
- Libya has halted production at its 270,000 bpd Sharara oil field.
- Saudi Arabia raised its crude prices to Asia for the first time in three months this morning.
- Hurricane Debby made landfall in the Big Bend region with no reported disruption to Gulf production.
- A second potential system has populated in the 7-day outlook with a path toward southern Mexico.
- Baker Hughes reported US oil rigs rose by 3 last week.
- As of 9:01 am CST: Brent crude oil down $0.61 to $76.20, US dollar index down $0.818 to 102.390 while the nearby e-mini S&P 500 futures contract is down 130.25 to 5243.00.
Diesel
- Nymex diesel net shorts have risen to their largest since 2020.
- Diesel futures are testing June lows to start the week. $2.2566 represents the low on June 4th.
Gasoline
- Nymex gasoline net length has fallen to its lowest level since 2017.
- Continuous RBOB futures closed below its lower Bollinger band on Friday.
- Continuous RBOB has eclipsed its June low and is trading at its lowest level since February.
Propane
- Conway is trading at .7100 while Belvieu is trading at .7275.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7525.
- Conway Swap Oct24 indicative midpoint ~.7325
- Conway propane is trading at 40% to WTI.
Natural Gas
- Overnight weather runs removed 7 CDDs for the two-week forecast.
- Baker Hughes reported nat gas rigs fell by 3 to 98 last week.
- Managed money participants cut nat gas length by 3.6k lots last week with gas down 8 cents on the week.
Equities: The S&P is off nearly 4% while the Dow is off 3% this morning as recessionary fears come roaring back. Japan’s Nikkei index fell 12%, which is its steepest loss since Black Monday in 1987.
