Written on: August 1, 2023

Energy Price Report

Tuesday, August 1, 2023

Crack spreads (difference between a barrel of crude & the refined products) are widening further as of this writing.  Futures are seeing gains, especially heating oil, whereas crude futures are seeing small losses amid further strength in the US dollar and weakness in equities.

Market participants looked ahead to US manufacturing, construction, and labor market data for further direction.

Asian Markets

The Asia Dow was little changed as of this writing, down 0.04% as the Hang Seng shed 0.34% whereas the Shanghai Composite closed flat and the Nikkei jumped 0.92% higher. The Japanese unemployment rate fell to 2.5% in June, as expected. On the other hand, the Caixin China Manufacturing PMI fell unexpectedly into contractionary territory at 49.2 last month. The Nikkei/S&P Global India Manufacturing PMI for India came in at 57.7.

European Markets

The final July Eurozone Manufacturing PMI (S&P Global) confirmed the 42.7 print from the flash estimate, indicating the sector did contract last month. The same was true for Germany (38.8) and France (45.1), although the latter saw surprise upward revision from 44.5. On a positive note, the Eurozone unemployment rate was revised down to 6.4% in May and held there in June, beating the 6.5% forecast. The German unemployment rate fell to 5.6% unexpectedly. Nevertheless, the French CAC 40 and German DAX had both lost 0.8% as of this writing. The CIPS/S&P Global UK Manufacturing PMI for July was finalized at 45.3, up from a 45.0 flash print but still below 50. The Nationwide House Price Index fell by 0.2% in July, as expected. Losses in UK shares were limited this morning, at 0.1% for the FTSE 100.

US Market

Futures for the Dow and S&P 500 had lost 0.2% and Nasdaq futures were trading 0.3% weaker this morning. Also unsupportive for crude, the US dollar continued its rally, up 0.3 percent.

Refined Products

The complex settled mixed but mostly higher yesterday amid a bullish oil demand note from Goldman Sachs and with early strength in equities. Brent crude rose by 57 cents to $85.56 a barrel, WTI crude jumped $1.22 higher to settle at $81.80 a barrel, gasoline futures weakened by 2.68 cents to settle at $2.9290 per gallon, heating oil climbed again, this time by 3.23 cents for a settlement of $2.9909 per gallon and natural gas futures edged down 40 points to settle at $2.634 per MMBTU.

Hurricane Center

The National Hurricane Center sees a medium chance of 40 percent that a disturbance located about 700 miles northeast of the Leeward Islands will develop into a tropical cyclone over the next 48 hours as it moves northwestward and then northward over the central Atlantic. The Center is also tracking a disturbance east of Nova Scotia, but gives it a low chance (10%) for cyclone formation.