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Bryant Gimlin, Energy Risk Manager ~ Office: (303) 350-3757 Cell: (970) 590-8782

Daily Market Comments for: For Friday, August 12, 2022

 

Date

Crude Oil

Diesel

RBOB

Natural Gas

08/05/2022

$89.01 U22

$3.2159 U22

$2.8556 U22

$8.0640 U22

08/08/2022

$90.76 U22

$3.1791 U22

$2.8862 U22

$7.5890 U22

08/09/2022

$90.50 U22

$3.3338 U22

$2.9602 U22

$7.8330 U22

08/10/2022

$91.93 U22

$3.4103 U22

$3.0703 U22

$8.2020 U22

08/11/2022

$94.34 U22

$3.4840 U22

$3.0715 U22

$8.8740 U22

 

In the News:  Bullish headlines once again dominate and keep energy futures moving higher.  Yesterday Crude Oil and Diesel ended sharply higher, yet RBOB (Gasoline) saw late technical profit taking (selling) that sold it back off to near unchanged.  Reduced flows of Crude Oil, Refined Product and Natural Gas from Russia to Europe seem to be the main area of support.  The International Energy Agency increased its 2022 oil demand by 380,000 for a total increase projection of 2.1-mbpd to 99.7-mbpd, citing increased oil demand for power generation on lack of Natural Gas supply.  U.S. unemployment claims were like CPI data a couple of days ago; bad but not as bad as expected, so the Biden administration tells all how great things are.  Jobless claims were up 14,000 to 248,000, yet that was better than the expectation for 260,000.  Led by a 136,000-bpd increase in Saudi Arabia OPEC increased production by 162,000-bpd in July to 28.84-mbpd.  Yet that is 4.8% (1.271-mbpd) below their share of the OPEC+ quota.  Three countries outside of the OPEC+ alliance, Venezuela, Iran, and Libya all posted a combined 84,000-bpd lower production numbers for July, eating up most of the OPEC gain.  Also supportive is U.S. stocks, which compared to the five-year average, show Crude Oil down 5%; Gasoline down 6%; Distillate down 24%. 

 

Products:  Higher basis in the Group and Chicago are exacerbating higher cash prices due to NYMEX gains.  Group Gasoline basis ended $0.0350 higher to -$0.2300; Group Diesel basis ended $0.0025 higher to +$0.0550.  Chicago Gasoline basis ended $0.0100 higher to -$0.1000; Chicago Diesel ended $0.0200 higher to +$0.0100.

 

Diesel posted the largest gain yesterday, Gasoline the smallest, resulting in mixed movement for NYMEX implied Refiner Margins. The September Gasoline Crack ended $2.36/bbl lower to $34.66/bbl; the September Diesel Crack ended $0.69/bbl higher to $51.99/bbl.

 

Overnight:  Energy futures are mixed with downward bias this morning on the overnight electronic session.  As of 05:00 in the spot months; (Sep) WTI Crude Oil is $1.18 lower to $93.16; (Oct) Brent Crude Oil is $0.89 lower to $98.71; (Sep) Diesel $0.0133 higher to $3.4973; (Sep) RBOB $0.0404 lower to $3.0311; (Sep) Natural Gas is off 156 to $8.7180.

Short Term:  Energy futures are set to post significant gains this week yet are off to a soft start this morning.  Worries of economic recession and potential lower energy demand as a result are keeping a cap on prices for now.  Yet as often stated there remains plenty of bullish support.  That includes tight U.S. fundamentals, (especially for Diesel), geopolitics with China making threats of embargos and sanctions against the U.S., the Russia-Ukraine war, Russia not supplying Europe with as much energy as needed, and so on.  The IEA and EIA are on opposite sides of demand and production predictions, while the bottom line is that OPEC+ continues to fail to meet production quotas and the Biden administration continues to hold the U.S. producer back.  Consequently there remains a lot of technical highs and dips while long term fundamentals remain bullish.  Today will likely see early profit taking give way to pre- weekend short covering.

End users should this dip now more than ever to get covered with Maximum Price contracts to ensure supply, take price “spikes” out of the equation, and still take advantage of market dips, even if short lived.

 

Natural Gas:  Along with the rest of the complex and despite better-than-expected inventory data, Natural Gas prices ended higher.  The EIA reported previous week injection was 44-bcf, ahead of expectations and on par with the year and the five-year average.  Total stocks at 2.501-tcf are 268-bcf below the same week last year while the deficit to the five-year average held steady at 338-bcf.  Strong support remains on high cooling demand continued projections for more export activity.  Weekly inventory data are summarized below.

Natural Gas

 

 

 

 

 

EIA Weekly Inventory

8/5/2022

7/29/2022

Change

Year Ago

5-Year Avg

Region

 

 

 

 

 

East

                564

                549

               15

                625

                 647

Midwest

                663

                643

               20

                738

                 732

Mountain

                148

                147

                 1

                185

                 181

Pacific

                252

                253

                (1)

                241

                 272

South Central

                874

                865

                 9

                979

              1,007

Total

             2,501

             2,457

               44

             2,769

              2,839

 

Propane: Cash Propane prices ended higher with plenty of support from the rest of the complex.  Conway ended $0.0275 higher to $1.0950; Mt Belvieu ended $0.0275 higher to $1.100.  On Wednesday the EIA reported a 2.1 million barrel increase in total stocks despite Exports rising 83,000-bpd to 1.565-mbpd and Production falling 39,000-bpd to 2.344-mbpd.  Midwest (Conway) prices are supported on the 100,000-barrel inventory draw.   Total stocks have now gone to a slight surplus to last year but are 10% below the five-year average.  Weekly demand was down 140,000-bpd to the previous week and 508,000-bpd below the same time last year. 

 

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