Outlook: Energies are starting the morning lower as a tug-of-war between major market drivers continue. Russia is reportedly sending additional troops including medical supplies to the border, contradicting their report of pulling troops back. The market is paying closer attention to progress involving an Iran nuclear deal which could bring a needed boost in supply to the tightening marketplace. With crude down over a dollar, traders seem to believe the Iran deal is a more immediate market driver this morning. On the US side, the EIA reported another net draw of petroleum inventories as demand continues to surge towards pre-pandemic levels.
Crude
- A US envoy says an invasion by Russia is imminent.
- US Secretary of State Antony Blinken will speak to UN security council this morning.
- Russia looks to be developing a contingency plan to sell products elsewhere in the event of US sanctions.
- Yesterday, state department spokesperson Ned Price said the US is in the final stages of indirect talks to revive the Iran deal.
- The EIA reported a build of 1.1 million barrels following estimates of a 1.8 million-barrel draw.
- The crude build is likely attributed to power outages that resulted in several refineries being down in Texas.
- The EIA reported an SPR draw of 2.6 million barrels which has the emergency reserve at its lowest levels since 2002.
- As of 9:00 am CST: Brent crude oil down $1.75 to $93.04, US dollar index up $.158 to 95.861 while the nearby e-mini S&P 500 futures contract is down 54.5 to 4415.50.
Diesel
- The EIA reported a draw of 1.6 million barrels
- US airport activity inches closer to pre-pandemic levels with TSA traveler throughput at 83% of 2019 levels according to Bloomberg.
Gasoline
- The EIA reported a draw of 1.3 million barrels.
- Google mobility data continues to steadily improve.
- Gasoline demand’s four-week average rose for a second straight week but still remains 180,000 bpd below the five-year average according to Bloomberg.
Propane
- Propane stocks fell 5.9 million barrels last week.
- The draw helped propane hold on to gains yesterday with Conway at $1.2450 and Belvieu at $1.2875.
Natural Gas
- The EIA is expected to report a 197 Bcf draw today.
- Since last Friday, 50 HDDs have been added to the two-week forecast.
- Total US demand fell for the third consecutive day yesterday, down 11.3 Bcf/d to 87.1 Bcf/d.
Jet Fuel Demand: US airport activity continues to inch closer to pre-pandemic levels. With levels at 83% of 2019, there is plenty of room for growth which will increase demand from an already tight diesel supply situation.
