July 24, 2019

July 24, 2019
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  • WTI is up 19c to $56.96/Bbl, and Brent is up 12c to $63.95/Bbl
  • The American Petroleum Institute (API) reported a whopping 10.96 MMBbl decline in crude stocks last week
    • The API data release comes a day before the more closely followed EIA report
  • Brent crude’s M1-M2 contracts are in contango for the first time since March
    • Contango typically indicates that short-term supply is exceeding demand
    • Brent had been in steep backwardation for M1-M2
    • Beyond the second month contract, Brent remains in a $5 backwardation through late 2022
  • The IMF lowered its forecast for global growth this year, citing the ongoing trade war between the US and China
    • In its World Economic Outlook released on Tuesday, the IMF projects the world economy will grow by 3.2% this year, down 0.1 percentage point from its forecast in April
    • The IMF, along with other agency reports from the IEA and EIA, are widely used in the modeling behind key oil demand projections
    • Demand concerns continue to be the dark cloud on the oil markets and oil price
  • EIA petroleum data is due out this morning at 9:30 am CT
    • U.S. Crude Inventories:                  –    4,443 MBbls (Bloomberg surveys)
    • U.S. Gasoline Inventories:             –    1,395 MBbls
    • U.S. Distillate Inventories:            +        382 MBbls
    • U.S. Refinery Utilization:               –      0.08% change
  • Natural gas is down 3.2c to $2.268/MMBtu
  • This week’s storage numbers are estimated to build by only 33 Bcf
    • However, storage facilities across the central and Midwestern portions of the US are noting surging injections after last week’s peak heat spelling less optimistic news for next week’s numbers (PointLogic)
    • This is largely the result of the presence of continued cool weather across the United States
  • Over the next 15 days, there should be large emerging heat waves across the western half of the United States, as well as portions of the northeast
    • However, weather models are also forecasting growing patterns of unseasonably cooler temperatures in the southeast and portions of the Midwest
    • Given the weather forecast, SoCal and CIG pricing should continue to remain high through the end of August, spelling good news for D-J producers who have noticeably slowed in production

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