Outlook: Energies were unable to hold positive momentum yesterday and may face a similar battle today. Crude and diesel are finding marginal strength today while gas is moving independently down over 2 cents. September WTI expired yesterday moving the October contract into the prompt position at a discount due to the backwardated market. Gasoline futures may be facing pressure as driving season winds down although industry estimates expect inventories fell last week. Refiners continue to pump product at elevated rates which has outpaced demand relative to historical averages this year. Diesel has begun to develop a stronger premium to gasoline which is expected from a seasonal standpoint and can occasionally be exaggerated by speculative spread plays. Contango in the diesel curve is also incentivizes tank filling ahead of fall demand which is right around the corner. Expect the market to firm up following the EIA’s inventory report and FOMC minutes released later in the session.
Crude
- US Secretary of State Antony Blinken left the Middle East without securing a ceasefire deal. (BBG)
- Russia’s four-week average crude exports fell 25,000 bpd last week while weekly flows fell 360,000 bpd to 2.93 mbpd.
- Saudi Arabia’s crude exports fell to 6.047 mbpd in June, down from 6.118 mbpd in May.
- The FOMC minutes will be released today at 12:00 pm CT.
- The Fed’s Jackson Hole economic symposium will start on Thursday.
- Reuters estimates crude stocks fell 2.7 million barrels last week.
- The API survey showed crude stocks rose 347,000 barrels last week.
- The EIA will report inventories at 9:30 am CT.
- As of 8:41 am CST: Brent crude oil up $0.35 to $77.55, US dollar index down $0.017 to 101.424 while the nearby e-mini S&P 500 futures contract is up 11.25 to 5631.00.
Diesel
- Reuters estimates diesel stocks fell 200,000 barrels last week.
- The API survey showed diesel stocks fell 2.247 million barrels last week.
Gasoline
- Reuters estimates gasoline stocks fell 900,000 barrels last week.
- The API survey showed gasoline stocks fell 1.1 million barrels last week.
- OPIS data shows national average same-store gasoline sales in June were down 4% y/y while sales through the first 6 months of the year were down 5.1%.
Propane
- Conway is trading at .7425 while Belvieu is trading at .7700.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7850.
- Conway Swap Oct24 indicative midpoint ~.7700
- Conway propane is trading at 42% to WTI.
- OPIS estimates propane stocks rose 1.38 million barrels last week.
Natural Gas
- Overnight weather runs removed 1 CDDs for the two-week forecast.
- Reuters estimates nat gas stocks rose between 22 and 41 Bcf last week.
- US gas production fell to 100.3 Bcf/d yesterday, the lowest level since mid-June.
Prompt Propane: Propane has shown resistance to downward pressure in crude this week. The 200-day MA looks to be a level of support with demand season approaching.
