Outlook: The energy complex is holding a softer tone to start the week with crude and refined products all working lower. Prices have lifted from their early morning lows but a lack of bullish drivers this morning has the market struggling to gain traction. China remains the bearish catalyst for energies with continued underperformance in economic growth. Shrinking profit margins for refiners has caused significant declines in product exports and refinery throughput year-over-year. Other major economies looking to come out of economic tightening, including the US, are trending in the right direction to avoid recessions which remains supportive. The US is approaching its first expected interest rate cut in September and the release of the Fed meeting minutes on Wednesday could provide further insight on any changes in expectations through the end of the year. Large price swings should be expected as the market navigates ongoing uncertainty.
Crude
- China’s customs data over the weekend showed significant declines in refined product exports suggesting lower crude processing rates.
- Russia’s crude processing averaged 5.53 mbpd in the first half of August, up 102,000 bpd from July. (BBG)
- Goldman Sachs lowered its 12-month recession probability from 25% to 20% due to supportive retail sales and jobless claims data released over the last week.
- Baker Hughes reported rig counts fell by 2 to 483 last week.
- LTD for September WTI is 8/20.
- The FOMC minutes will be released on Wednesday this week.
- As of 8:53 am CST: Brent crude oil down $0.16 to $79.52, US dollar index down $0.221 to 102.242 while the nearby e-mini S&P 500 futures contract is up 6.25 to 5585.00.
Diesel
- China’s diesel exports fell 41% y/y in July, according to customs data.
- Nymex HO net length rose by 4.2k lots last week.
Gasoline
- China’s gasoline exports fell 35% y/y in July, according to customs data.
- Nymex RBOB net length rose by 6.4k lots last week.
Propane
- Conway is trading at .7725 while Belvieu is trading at .7575.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7725.
- Conway Swap Oct24 indicative midpoint ~.7575
- Conway propane is trading at 41% to WTI.
Natural Gas
- Overnight weather runs added 5 CDDs for the two-week forecast.
- Baker Hughes reported nat gas rigs rose by 1 to 98 last week.
- European gas inventories are 89% full, which is just shy of the 90% mark required by the EU.
Continuous Daily NG: Natural gas futures are testing the 100-day moving average for the fifth time in the last two weeks. Bullish weekend weather runs may be provided support today with the market up over 10 cents.
