Energy Market Enters September With A Bullish Sentiment

Energy futures are climbing this morning with the prompt month distillate contract leading the way with ~1.4% gains to kick off September trading. RBOB, WTI, and Brent futures are following, trading up about 1% ahead of today’s formal session. Low global supply outlook due to production cuts from the world’s largest oil cartel seems to be outshining the so-far dismal ‘return’ of the Chinese economy this morning, taking credit for today’s bullish sentiment.

It isn’t just fundamental sentiment that’s bullish this morning: general biases based on a slew of technical indicators are also either confirming a current bullish trend or calling for higher prices in the short term. It should be noted, however, that if prices stay where they’re trading currently, this will mark the first in eight weeks that heating oil futures will end lower than the week before. Whether the weekly loss will signify a trend reversal, or it’s just a token bear trap, remains to be seen.

Retail gasoline prices are on the rise heading into the holiday weekend, as pointed out by the EIA on their website this morning. The Administration cites oil production cuts from OPEC+ and low national gasoline inventories, which are expected to stay low over the coming months due to the upcoming fall turnaround. The scheduled maintenance for Irving’s New Brunswick and Monroe’s Trainer refineries were named specifically.

While it looks scary, the 7-day hurricane forecasts in the Atlantic Basin are currently keeping all 4(!) named storms out to sea (including the remnants of Idalia who visited the eastern seaboard earlier this week), threatening only marine traffic and fish. So far this season U.S. energy infrastructure has remained more or less unscathed. The NOAA is tracking two disturbances off the west coast of Africa this morning, both of which will likely develop over the next week, one of which will churn slowly westward.

From the Market Update pdf (attached) find details for RBOB and HO Technicals.

Click here to download a PDF of today's TACenergy Market Talk.