Outlook: Energies are rebounding this morning after yesterday’s significant selloff. The UAE backtracked on its comments yesterday about raising production and continues to support OPEC’s production targets. While they will comply with OPEC, they said they would be in support of increasing production if necessary. President Zelenskyy made comments about Ukraine’s willingness to negotiate to end the war, however, no concessions were presented by either side. The market remains hypersensitive to any comments that could influence the supply. Market fundamentals continue to show a tightening market with the EIA reporting a net petroleum draw of 10.6 million barrels for last week. Rising energy prices continue to fuel inflation with the CPI hitting a multi-decade high of 7.9%
Crude
- The UAE has backtracked on its comments about increasing production and reiterated its support to OPEC.
- Iraq spoke against increasing production following the comments from the UAE yesterday.
- OPEC+ delegates remain focused on the fundamentals of the market and not the geopolitical influence.
- Russia and Ukraine’s foreign ministers are set for talks in Turkey today.
- Spanish refiner Cepsa does not plan to buy oil from Russia in the foreseeable future according to an email from the company.
- Crude saw a larger than expected draw of 1.9 million barrels in yesterday’s EIA report.
- The year-over-year CPI grew to 7.9% from 7.4%
- As of 9:05 am CST: Brent crude oil up $4.08 to $115.23, US dollar index up $0.350 to 98.318 while the nearby e-mini S&P 500 futures contract is up 34 to 4238.
Diesel
- Diesel saw a larger than expected draw of 5.2 million barrels in yesterday’s EIA report.
- Refineries continue to produce jet fuel over distillate putting pressure on distillate prices.
- Asia is expected to add 6.8 million bpd of new oil refining capacity by 2026.
Gasoline
- Gasoline saw a smaller than expected draw of 1.4 million barrels in yesterday’s EIA report.
- Implied gas demand grew by 227,400 barrels last week, showing no signs of demand destruction thus far with rising gas prices.
Propane
- Conway is trading at $1.4900 and Belvieu at $1.4900.
- The EIA reported a draw of 1.6 million barrels.
- Outside market influence continues to drive propane prices.
Natural Gas
- Overnight weather runs removed 1.5 HDDs through the two-week forecast.
- Total US demand increased by 1.9 Bcf/d yesterday to 113.4 Bcf/d.
- The EIA is expected to report a 120 Bcf draw today.
Brent Intraday Range: In two of the four trading sessions this week Brent crude has swung by the most on record. In normal times, a 5-dollar swing would be considered extreme, but they’re now considered a slow day in a market seeing double-digit swings.
