Energy Market Update – July 3, 2024

As of Monday July 1st, the strength in the market has continued, with diesel prices jumping over 3% in just one session. Oil prices gained 6% in June after sagging in May. The RSI ( Relative Strength Index) is sitting at 67.9. Anything above 70 is considered to be in Overbought territory, which would indicate we should be moving towards a correction lower. It remains to be seen when that will happen.

Reasons for the move upward: analysts have pointed towards rising tensions between Israel and Hezbollah, and strong demand forecasts, although it might seem the word “forecasts” is doing all the heavy lifting in that sentence. Earlier this week the other driver was Hurricane Beryl, and whether its path would veer toward the Gulf of Mexico and disrupt oil production. Beryl was a Category 5 storm as it came into the Caribbean islands causing significant damage and power outages. As of this morning it looks to be that the direction of this storm has changed and is expected to be weakened into a tropical storm by the time it enters the Gulf late this week, according to the U.S. National Hurricane Center. This should provide relief that southern refineries will not be impacted, and result in taking some pressure out of current price increases.

At the time of this writing distillate and gas are down slightly on the NYMEX. That may change as the day progresses. The DOE report out this morning (see chart below) is showing stronger draws than expected on crude, distillate, and gas. Demand is higher on both distillate and gas, which could be the highly anticipated travel for the Fourth of July holiday. For now, this report could swing the market back to the upside.


For July 2024, the export arbs for LP are open to the Far East. With current Mt. Belvieu pricing plus loading fees and freight, it is still $.07 cents cheaper to export out of the U.S. than what Far East pricing is for the same time frame. What this means? As long as the arbs remain open it can indicate strong exports which draws down our supplies here at home, and effects our pricing as well. Recently propane has hitched a ride with crude and has been on the move up.

The EIA was expected to report a build of 1.99 million bbls. in U.S. propane stocks this week. The actual came out to a 2.301 bbl. build. Good news, yes, and hopefully that trend continues while we are in the build season. See chart below for the most recent U.S. Propane Inventories.

We still have a long way to go before we know what will be needed domestically for our heating and drying timeframe, while keeping in mind that when prices are right for other buyers, we as a country will continue to export.

We are offering contracts for the upcoming season, if you are interested in locking down some gallons, please reach out to your Energy Account Manager.

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