Outlook: Energies are seeing slight losses to start the morning following a three-day surge. There’s continued commentary around the European Union and an embargo of Russian oil however, multiple countries have spoken against the sanction stating a recession would be imminent. Currently, Russian oil is finding its way to the market as countries like India are taking advantage of this hefty discount. Reports are that Russian cargoes are being sold at a $20-$30 discount to Brent crude. OPEC is already receiving pressure to produce more oil with prices continuing to climb, but a full Russian oil embargo would greatly increase the need for more barrels to the market to prevent price levels that could result in recessions. On the US side of energy, Reuters is calling for another net draw of petroleum products as inventories remain tight across the board.
Crude
- Members of the EU such as Poland, the Netherlands, and Germany are backing away from talks regarding an energy embargo.
- Russian Prime Minister says oil could go to $300 if their oil is shunned.
- President Zelenskiy said that Ukraine will hold a referendum to decide on any compromises with Russia via vote and that the country is willing to consider security guarantees from NATO member states.
- German Economy Minister Robert Habeck called on OPEC to increase oil production and said Gulf states should not profit from global sanctions on Russia.
- Saudi Arabia continues to express concern over storage and spare capacity due to Houthi attacks over the weekend.
- The Fed Chair Powell reiterated that inflation is too high and that they will take necessary steps to address inflation levels.
- Reuters is calling for crude inventories to be unchanged for last week.
- The API will report their inventory survey at 3:30 CST.
- As of 9:03 am CST: Brent crude oil down $0.40 to $115.34, US dollar index down $0.123 to 98.374 while the nearby e-mini S&P 500 futures contract is up 36.50 to 4488.50.
Diesel
- TSA passenger counts have come in above 2 million on 12 of 20 days so far this month, which is 200,000-400,000 below pre-pandemic levels.
- Jet fuel demand is expected to grow into the summer travel season putting continued pressure on inventories.
- China is experiencing massive flight cancellations after yesterday’s Boeing 737 crash that included 132 passengers. Roughly 75% of flights have been canceled according to Bloomberg.
- Reuters is estimating a draw of 1.6 million barrels for last week.
Gasoline
- Reuters is estimating a draw of 2.1 million barrels for last week.
- Georgia and Maryland have halted their state’s gas and diesel tax for 30 days.
Propane
- Conway is down .5 cents to $1.3950 and Belvieu is down .75 cents at $1.4125.
- As we move into summer propane should begin following export fundamentals.
Natural Gas
- Overnight weather runs added 7 HDDs through the two-week forecast.
- Total US demand increased by 0.9 Bcf/d yesterday to 90 Bcf/d.
EU Oil Embargo: Germany is a member of the EU that has opposed an oil embargo and the chart below illustrates why. Germany’s Schwedt and Leuna refineries process 500,000 bpd of crude which mostly originates from Russia. Schwedt alone supplies 90% of gas, jet fuel, and diesel consumed in Berlin and Brandenburg according to the refinery website.
