Outlook: Energies are looking to end the week on a positive tone but ultimately remain on track for weekly losses. The complex has shown strength in the ladder half of the week but has yet to show a technical shift which leaves a bullish case lacking. Healthy draws reported for inventories last week provided the most bullish sentiment this week but it will likely take a string of similar reports before domestic fundamentals take control of the trend. A resumption of ceasefire negotiations slated for this weekend will likely weigh on upside momentum despite continued failed attempts to secure a deal. The macroeconomic environment may also remain a bearish presence despite interest rate cuts expected to begin next month. A lag should be expected for economic recovery, however, psychological influences could be supportive, especially if the Fed surprises with a larger than 25 bp cut. Equity markets have shown resilience through recent instability with S&P trading near all-time highs ahead of Powell’s speech at the Jackson Hole Symposium later this morning.
Crude
- Another oil tanker in the Red Sea carrying 150k tons of crude was attacked by Houthi militants this morning causing evacuation.
- US and Israeli negotiators are heading to Cairo for a new round of cease-fire discussions slated to begin Sunday.
- India’s July crude imports were down 0.8% y/y in July. (Reuters)
- The prompt crude spread has expanded ~20 cents this week following the September contract expiration.
- The 7-day tropical weather outlook for the Gulf shows no storm threats.
- Baker Hughes will report rig counts at 12:00 pm CT.
- Fed Chair Jerome Powell will speak today at 9:00am CT.
- As of 8:17 am CST: Brent crude oil up $1.03 to $78.25, US dollar index down $0.038 to 101.465 while the nearby e-mini S&P 500 futures contract is up 36.25 to 5630.00.
Diesel
- Short term resistance may be found at the 9-day moving average near $2.3107
- India’s diesel exports rose 7% m/m in July. (Reuters)
- September diesel futures are poised to hold premium over gasoline through expiration next week.
Gasoline
- Short term resistance may be found at the 9-day moving average near $2.2886.
- AAA reports the national average retail gas price at $3.374, down 6 cents from last week.
Propane
- Conway is trading at .7325 while Belvieu is trading at .7600.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7800.
- Conway Swap Oct24 indicative midpoint ~.7625
- Conway propane is trading at 42% to WTI.
- The Canadian government has forced Canada’s railroads to enter contract arbitration with its labor union and freight is expected to resume flows within a few days.
Natural Gas
- Overnight weather runs removed 2 CDDs for the two-week forecast.
- The EIA reported natural gas stocks rose 35 Bcf last week.
- At 3,299 Bcf, natural gas inventories are 221 Bcf above last year’s levels and 369 Bcf above 5-year average levels.
Continuous Daily HO:
