Uncertainty Shadows Energy Markets

• WTI crude futures fell by more than 3% to below $74 per barrel on Friday, the lowest in 2 months, as global oil demand concerns outweighed supply risks from rising geopolitical tensions in the Middle East.
• Due to slowing demand from China, one of the world’s top consumers, total fuel oil imports dropped by 11% in the first half of 2024.
• The ISM Manufacturing PMI revealed a larger-than-expected contraction in US factory activity.
• Managed money funds fell for the second consecutive week, totaling 263,326 contracts

Gasoline Prices Hit 2-month Low

• Gasoline futures in the US fell to around $2.32 per gallon, marking a 6-week low amid a bleak demand outlook.
• Reduced fuel demand from the world’s largest consumer, China, is evident in maritime data, which shows the lowest number of oil supertankers heading to China in two years. Additionally, the demand for gasoline has declined as the Chinese government promotes electric vehicles.
• Speculators now hold the largest short-only positions in seven years, indicating disappointment in the summer driving season, despite some signs of demand recovery and declining stockpiles.
• Fresh PMI data from the US shows that manufacturing activity contracted for a third consecutive month in July, while the expansion of construction activity fell to a 1-year low.

Natural Gas Found Support Amid Higher Temperature Estimates

• US natural gas futures were near the $2.05 per MMBtu mark, trimming the week’s surge after the latest weather forecasts eased their warnings of excessive heat. In turn, this lessened the demand for gas-intensive air conditioning.
• Risks of lower gas supply inventories maintained some support in global gas markets.
• Added capacity for US LNG exporters increased the amount of foreign sales and raised buying competition for US consumers.
• Looking ahead, expectations of intense heat in the lower 48 states have supported the demand for gas-intensive cooling.