Data Deluge Week Provides Plenty Of Information To Process Across The Market

Energy contracts are taking a breather to start Thursday’s session, with small losses seen just ahead of 8 am central, after reaching fresh multi-month highs in the overnight session. 

It’s data deluge week with the DOE, OPEC and EIA all releasing their monthly oil market reports on top of the weekly stats, giving traders plenty of information to digest on top of the normal debate over interest rates and other geopolitical issues.

Like the DOE earlier in the week, OPEC’s analysts are increasing the global demand forecast for the next couple of years, largely because economic activity has not contracted as much as many had feared so far in 2023. The cartel’s PHDs predict that air travel will continue its rapid recovery this year, and be a key driver of demand growth, while China, India and the US will also see growth in gasoline demand from steadily rising road mobility rates. Delta Airlines seems to have confirmed the OPEC theory of strong air travel reporting record quarterly earnings this morning, despite lower earnings from its refining segment. 

The IEA is taking a more pessimistic view and is lowering its growth forecasts due to a deepening manufacturing slump that is offsetting the surging petrochemical use in China. The IEA also highlighted the sharp drop in demand from African countries after fuel subsidies were taken away, a painful reality shared by countries like Venezuela, Mexico and India that continue to struggle with market realities.

The DOE’s weekly report was highlighted by steep declines in the weekly demand estimates, which confirmed predictions that consumers had filled their tanks ahead of the holiday, and many commercial operations took 4 days off to start the month. The other big number in the report was a surge in refinery runs across most regions as facilities recovered from their June setbacks.

So much for that flaring:  Despite a rash of unplanned operational upsets in the past week impacting both Southern and Northern CA refiners, the DOE figures showed PADD 5 refinery runs surged to their highest levels since the start of COVID last week, which put downward pressure on both gasoline and diesel basis values across the West Coast. PADD 2 run rates came close to an all-time high last week, as Midwestern refineries continue to benefit from buying land-locked crude and making more product than their local markets can handle, sending Chicago-area basis levels sharply lower once again. 

The lone holdout in the refinery run increases was the rounding error known as PADD 4, which saw its run rates decline presumably due to the latest in a string of mishaps at Suncor, which is still seeing operations disrupted by a cyber-attack.

ExxonMobil announced it will become the largest CO2 pipeline operator in the US this morning, with a $4.9 billion purchase of Denbury.

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