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Energy Market Update

August 6, 2021
Asian crude imports weakening: Asia, the world’s top-consuming region, saw July’s crude imports decline for the fourth time in five months. Demand softening, considering high prices and continued pandemic concerns, was the key reason for the performance. Asia’s imports were at 21.77 million barrels per day (bpd) during the month which was a 10-month low and considerably lower than June’s 23.08 million bpd. China led this weakness as its imports were the least since February 2020.

UBS expectations : Since achieving highest prices in more than two years during early July, crude prices have since fallen around 10%. Despite this recent drop, investment bank UBS does not believe the current Covid challenges will derail the oil rally as they expect economic normalization to continue globally. This will support prices in the coming months when they project Brent crude to trade between $75 and $80 during the second half of 2021 with global oil demand exceeding 99 million barrels a day during 2021.

Retail gas: U.S. retail gas prices continue to move higher and, according to AAA, are currently averaging
$3.19/gallon across the country.

Market Opinion: WTI crude is beginning the day on a slightly positive note after three consecutive days of declines which has it now firmly below the $70 level but continuing to stay above the 100 Day Moving Average (DMA) of $67. Both RBOB gasoline and ULSD distillates also are showing small gains this morning after the rise of Covid’s delta variant and demand concerns have contributed to pushing these contracts to lower levels in each day to begin the week. Gasoline’s larger than expected inventory draw has RBOB finding support at 50 DMA of $2.2328.
The Energy Information Administration reported on Wednesday a 1.453 million-barrel build in U.S. propane inventory. Expectations were for a 1.623 million-barrel build. The five-year average had been a 1.083 million-barrel build for week 31 of the year.

With propane inventory below last year by 20.743 million barrels propane inventory builds need to be above average to not be bullish for propane prices. While this build was 370,000 barrels more than the five-year average the deficit to last year increased.

U.S. domestic propane production was down 9,000 bpd to 2.322 million bpd. Propane imports decreased 14,000 bpd to 74,000 bpd. U.S. domestic demand increased 334,000 bpd while exports decreased 299,000 bpd.

U.S. propane inventory now stands 20.743 million barrels, 23.9 percent below this time last year and 13.5 percent below the five-year average inventory level.
by Lucas Ploen compiled from CHS Inc. Market News 
Posted: 8/6/2021 6:03:05 PM by Mallory Shoemaker | with 0 comments
Filed under: energy

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