Written Commentary
CRUDE OIL
September Crude Oil is higher this morning in the wake of a bullish API report and renewed threats to punish India if they continue to buy Russian crude oil. So far, India has been stalwart against the pressure, as government officials have declared they intend to reserve their right to supply their energy needs as they see fit. However, there was a decline detected in late July. The API report showed US crude oil stocks were -4.2 million barrels for the week ending August 1 versus trade expectations from a Reuters poll calling for -600,000. Gasoline stocks were -860,000 versus -400,000 expected, and distillate stocks were +1.6 million versus +800,000 expected. The EIA report will be released this morning. In addition to the stock levels, the poll has an average expectation for refinery runs to be down 0.2% from last week at 95.2%. Last week’s EIA report showed crude oil stocks were +7.7 million barrels for the previous week.
NATURAL GAS
September Natural Gas is higher this morning, as an upcoming a hot weather trend may be enough to lift the market off its three year lows. So far this summer, the weather has not been hot enough, long enough to counter the trend of above normal injections into US supply. It may be late in the season for the weather to have much impact, but then again, prices are already very low. The 6-10 and 8-14 day forecast show above or much above normal temperatures across most of the lower 48 US states, with the exception of a couple of small areas of normal temps in the PNW and southwest. LSEG said average gas output in the Lower 48 states rose to 108.0 billion cubic feet per day (bcfd) so far in August, up from a record 107.9 bcfd in July. They projected average gas demand in the Lower 48, including exports, to rise from 105.1 bcfd this week to 110.5 bcfd next week. They also noted that average amount of gas flowing to the eight big US LNG export plants has risen to 15.9 bcfd so far in August, up from 15.5 bcfd in July and close to the record 16.0 bcfd in April.
PRODUCTS
The API report overnight was a little bullish for gasoline with stocks -860,000 barrels versus -400,000 expected and a for diesel with distillate stocks up 1.6 million versus +800,000 expected. As of last week’s EIA report, US gasoline stocks were around 228.4 million barrels, up from 223.8 million a year ago just below the five-year average of 229.3 million. Stocks have a seasonal tendency to decline into November as the driving activity slows and refineries switch over heavier distillate mix.
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