Outlook: The energy complex is in the green this morning but remains far from recouping yesterday’s losses. The extent of selling pressure yesterday was a bit of a head-scratcher but it's evident that the bearish bias remains strong. Brent’s option skew has flipped back in favor of puts after last week’s rally which pushed prices back over $80. A ceasefire proposal has been accepted by Israel but this situation has come and gone before with Hamas continuously rejecting each offer. Crude prices have found support near $72 both in May and earlier this month and will remain a downside target. Uncertainty with OPEC’s production decision looming in October is a catalyst traders will be looking to price in. An unwinding of cuts on any level would likely be viewed as bearish even after the recent selloff. The market should find firmer footing later this week with inventories and Fed meetings on the docket.
Crude
- US Secretary of State Antony Blinken said yesterday that Israeli Prime Minister Benjamin Netanyahu accepted a cease-fire proposal, and the deal now sits with Hamas. (Reuters)
- Libya’s Sharara oil field saw production increase to 85,000 bpd after being completely shut down due to protests earlier this month. (BBG)
- China imported a record volume 1.47 mbpd of crude from Malaysia last month reflecting a growing appetite for Iranian crude. (BBG)
- US oil and gas M&A activity rose 57% last year with industry consolidation being driven by higher cash flows. (Reuters)
- Brent’s second-month options skew has shifted back in favor of puts.
- LTD for September WTI is today.
- The API will report its inventory survey after 3:30 pm CT.
- The FOMC minutes will be released on Wednesday this week.
- The Fed’s Jackson Hole economic symposium will start on Thursday.
- The S&P has risen for eight consecutive sessions after rising over 1% yesterday.
- As of 9:03 am CST: Brent crude oil up $0.45 to $78.11, US dollar index down $0.240 to 101.646 while the nearby e-mini S&P 500 futures contract is up 7.25 to 5637.00.
Diesel
- Reuters estimates diesel stocks rose 200,000 barrels last week.
- Group 3 diesel basis has risen ~6 cents this month but remains below 5-year seasonal averages.
- Ukrainian drone strikes have set ablaze 20 of 74 diesel storage tanks at the depot in Proletarsk. (Reuters)
Gasoline
- Reuters estimates gasoline stocks fell 400,000 barrels last week.
- The 321-crack spread fell to its lowest level since October yesterday.
Propane
- Conway is trading at .7325 while Belvieu is trading at .7575.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7750.
- Conway Swap Oct24 indicative midpoint ~.7600
- Conway propane is trading at 42% to WTI.
Natural Gas
- Overnight weather runs removed 1 CDDs for the two-week forecast.
- Planned maintenance in the Gulf helped drive prices up over 10 cents yesterday.
- Reuters estimates nat gas stocks rose between 22 and 41 Bcf last week.
Continuous 321 Crack: Refining margins have continued on their downward trajectory with prices falling to their lowest levels since October. The October low seems like a reasonable downside target with refiners still operating at elevated rates with lackluster demand.
