Outlook: Energies are trading significantly higher to start the morning following reports that Russia has invaded Ukraine. WTI manage to trade above $100 early this morning but has since retreated to $97. Russia represents a large energy presence in global trade and the market will look to price in a potential oil embargo of the country. Reports that oil tankers are already avoiding extracting crude from the country in anticipation of sanctions means disruption to the market is already taking place. President Putin announced the “special military operation” will aim to demilitarize Ukraine and replace its leaders. The EIA will release inventory data this morning, however, fundamentals will likely be of little importance today. The API surveyed showed a crude build of nearly 6 million barrels, while the Reuters poll is suggesting an 800,000 build in crude stocks.
Crude
- Russia has launched its invasion of Ukraine and intends to demilitarize the country and replace its leaders.
- The US announced they will impose “severe sanctions” following the reports of the attack.
- The US is considering an oil reserve release in coordination with allies to counter the surge in oil prices.
- Oil tanker owners are avoiding offering ships to collect crude from Russia as they wait to see what sanctions will be placed on the country.
- Russia exports around 5 million bpd and accounts for roughly 10-12% of the global oil trade.
- Russia relies on tankers for about two-thirds of its crude exports according to Bloomberg.
- The API survey showed a crude build of nearly 6 million barrels.
- Reuters poll projects crude stocks to increase by 800,000 barrels for last week.
- The weekly EIA report will be released this morning at 10:00 am CST.
- As of 9:27 am CST: Brent crude oil up $7.28 to $104.04, US dollar index up $1.086 to 97.268 while the nearby e-mini S&P 500 futures contract is down 72 to 4150.50.
Diesel
- Reuters poll projects a diesel draw of 1.8 million barrels.
- The API survey showed diesel stocks fell by 985,000 barrels.
Gasoline
- Reuters poll projects a gasoline draw of 1.5 million barrels.
- The API survey showed gasoline stocks rose by 427,000 barrels.
Propane
- An OPIS survey projects a draw of 3.6 million barrels.
- Overseas prices are up 9-11 cents and it’s expected that US markets will follow.
Natural Gas
- This morning’s gains are likely attributed to the Russian invasion of Ukraine.
- The EIA is expected to report a 128 Bcf draw today.
- Overnight weather runs removed 4 HDDs through the two-week forecast.
- Total US demand increased by 14.5 Bcf/d.
Continuous Daily WTI: We’ve talked about crude trading between $90-$95 while two key market drivers continued in a tug-of-war and today that has ended. The Russian invasion sent a spark to the market and pushed crude to a new contract high of $100.54.
