Outlook: The energy complex is charged up today with crude up nearly three dollars and refined products following closely behind. It’s a strong risk-on response with geopolitical escalations developing over the weekend. Hezbollah and and Israel exchanged volleys of missile and drone strikes over the weekend while Libya has now completely halted oil production and exports. Libya produced 1.15 mbpd of oil last month and a complete stoppage is a significant development for global oil balances. The US dollar has fallen under heavier pressure with the Fed becoming more vocal with its dovish shift. The prospect of declining interest rates is generally viewed as supportive of economic growth and energy demand, however, several cuts may be needed before results develop. The economic slate is light through the first half of the week which may keep markets focused on geopolitical developments and domestic fundamentals.
Crude
- After a brief restart at Libya’s Sharara oilfield, the government announced a full close of all production and exports in the country. Libya produced 1.15 mbpd of oil last month. (BBG)
- Israel and Hezbollah exchanged a series of attacks over the weekend, while Iran’s foreign minister vowed definitive retaliation against Israel. (BBG)
- Fed Chair Jerome Powell provided a dovish tone in his speech at the Jackson Hole Symposium last Friday.
- The US dollar index has fallen to near 13-month lows.
- Baker Hughes reported oil rigs remained flat at 483 last week.
- As of 8:54 am CST: Brent crude oil up $2.44 to $81.46, US dollar index up $0.185 to 100.903 while the nearby e-mini S&P 500 futures contract is up 5.25 to 5658.00.
Diesel
- Continuous diesel futures are trading back above the 9-day moving average today.
- Managed money participants increased HO net length by 4.5k lots last week.
- LTD for September HO is Friday 8/30. Please be out of positions by EOD 8/29.
Gasoline
- Continuous RBOB futures are trading back above the 9-day moving average today.
- This week is the last week of “driving season” ahead of Labor Day weekend.
- Managed money participants increased RBOB net length by 2.8k lots last week.
- LTD for September RBOB is Friday 8/30. Please be out of positions by EOD 8/29.
Propane
- Conway is trading at .7475 while Belvieu is trading at .7750.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.7950.
- Conway Swap Oct24 indicative midpoint ~.7775
- Conway propane is trading at 42% to WTI.
- Canadian National railroad works intend to appeal the governments order to force them back to work last week.
- Propane is up around a penny this morning lagging behind the larger gains in crude.
Natural Gas
- Overnight weather runs removed 2 CDDs for the two-week forecast.
- The US announced new sanctions against Russia and entities carrying Russian products including LNG.
- Baker Hughes reported US nat gas rigs rose by 1 to 97 last week.
- LTD for September NG is 8/28. Please be out of positions by EOD 8/27.
Continuous Daily WTI: With a sharp move today, continuous WTI is approaching resistance at its 200-day moving average.
