Outlook: Energies are trading higher today but ultimately are on pace to settle for a weekly loss. It’s been a historic week for energies across the board with unprecedented volatility. Gas and diesel prices across the country are at record levels and crude traded at levels not seen since 2008 to start the week off. The market has pulled back significantly from its weekly highs but struggles to find firm ground to stand on with volatile swings daily. Supply disruption is the measure the market is looking to establish with countries like the US banning imports while others continue to buy Russian oil. We’re also seeing declining open interest as traders continue to liquidate and sit on the sideline with risk at an all-time high. The effects of the war will continue to provide unpredictable market conditions.
- President Putin made positive remarks about progress in the meetings between Russia and Ukraine.
- Talks between Russia and Ukraine are happening on a daily basis.
- The Iran nuclear deal has been put on pause for “external factors” according to the European Union foreign policy chief Josep Borrell.
- Borrell said there is no time frame for nuclear deal talks to resume, but it continues to reiterate that a deal is close.
- Saudi Arabia reported a drone strike at a refinery in their capital however, the damage was minimal, and no disruption occurred.
- Crude traded in a nearly 27-dollar range this week with a high of $130.50 and a low of $103.63.
- Baker Hughes will report their rig count at 12:00 CST.
- As of 9:40 am CST: Brent crude oil up $1.79 to $111.16, US dollar index up $0.239 to 98.739 while the nearby e-mini S&P 500 futures contract is down 3.25 to 4260.50.
- The average nation diesel price is $5.132 according to AAA
- Diesel saw the most volatility this week trading between $4.6709 and $3.1699.
- AAA believes 5-dollar gas is the range that will alter people’s lifestyle and show signs of demand destruction.
- The average national gas price will end the week at $4.331 with the week ago average at $3.837 according to AAA.
- Conway is trading down 5 cents at $1.4100 and Belvieu down 5.75 at $1.4200.
- Hubs have fallen ~14 cents since Wednesday.
- March HDDs are at 95.1% verse the 5-year average.
- Overnight weather runs added 3 HDDs through the two-week forecast.
- Total US demand was relatively unchanged yesterday.
- The EIA reported a draw of 124 Bcf.
Russian Revenue vs Sanctions: Russia relies heavily on exports and specifically energy exports to fuel its economy. War is expensive and sanctions imposed on the country likely have a significant impact on the military budget. The Ruble has collapsed under the trade surplus and the repercussions of war will likely be long-lasting.