Outlook: Energies are pushing sharply lower for the second consecutive day erasing much of the gains seen as a result of the Russian invasion of Ukraine. A couple of bearish stories are colliding and putting significant pressure on the energy markets. Covid has had little market influence for a while now but has come roaring back with China reporting a spike in cases resulting in major cities locking down once again. Russia is stating that they have written guarantees from the US that sanctions won’t affect the Iran deal. The market is also seeing a liquidity crunch which leaves the market increasingly vulnerable to big swings. Increases in margin have made it more expensive to trade the same amount of oil and have helped push open interest to its lowest levels since 2015.
Crude
- Russia has said they have written guarantees that US sanctions won’t affect the Iran deal.
- Russia and Ukraine continue to hold talks regarding a ceasefire.
- A new covid outbreak in China poses a threat to demand with lockdowns in place in various cities.
- UK Prime Minister Boris Johnson is expected to travel to the UAE to push for more oil output.
- India expressed interest in taking a Russian offer to buy crude oil.
- The EIA Drilling Productivity Report forecasts that oil production will increase by 117,000 bpd between Mar22 and Apr22.
- Reuters is calling for a 1-million-barrel draw of crude stocks.
- OPEC will issue a market report around 8:50 CST.
- As of 8:26 am CST: Brent crude oil down $7.32 to $99.54, US dollar index down $0.240 to 98.760 while the nearby e-mini S&P 500 futures contract is up 22.50 to 4194.50.
Diesel
- Reuters is estimating a 1.9-million-barrel draw in diesel stocks.
- The EIA reports US retail diesel prices rose to $5.25 last week.
Gasoline
- Reuters is estimating a 1.7-million-barrel draw in gasoline stocks.
- The EIA reports US retail gasoline prices rose to $4.18 last week.
Propane
- Conway is trading at $1.29 and Belvieu at $1.3125.
- Propane continues to experience influence from outside markets with heightened volatility in energies.
Natural Gas
- Overnight weather runs removed 4 HDDs through the two-week forecast.
- Total US demand climbed by 6 Bcf/d over the weekend.
WTI Daily Range: Energies continue to see increased volatility as it struggles to find solid ground to stand on. Low liquidity is widening the bid-ask allowing for larger market swings as the product is traded.
