Outlook: The energy markets are trading higher this morning on the speculation that more sanctions are coming against Russia. Further supply issues are also providing support as well. The EIA report is expected to see further draws today in the 9:30 CST report. Russian Ural crude continues to trade at a $31 discount to Brent. Several Countries have stated they are willing to take the discounted crude, but it is unclear if the logistics will all work out. In the meantime, Russian Refineries and wells are having to slow production due to a lack of storage and exports.
Crude
- EU leaders are meeting in Brussels this week to discuss further sanctions of Russian energy products.
- Biden will meet with the EU on Thursday to encourage a ban on Russian energy
- Poland’s 2nd largest refiner is no longer using Russian crude oil
- Japan’s largest refiner is no longer taking Russian crude oil
- A key Nigerian pipeline has only been able to deliver 5% of its promised supply due to consistent vandalism and theft
- A vital Black Sea port is currently out of commission due to recent storm damage
- An industry leader is expecting a 4.3 million barrel draw in this morning’s inventory report.
- As of 9:06 am CST: Brent crude oil up $5.43 to $120.91, US dollar index up $0.363 to 98.885 while the nearby e-mini S&P 500 futures contract is up 32 points to 4472.5
Diesel
- An industry leader is expecting a draw of 625,000 barrels in today’s EIA report
- Demand could lag behind pre-pandemic levels until 2024 according to Bloomberg
- Diesel continues to be the tightest market in energies
Gasoline
- An Industry leader expects a draw of 826,000 barrels in today’s report.
- Implied demand is just under 9 million bpd for the past two weeks
Propane
- Propane is seeing very low inventories and could see this year finish with the third-lowest inventory in the last ten years.
- Propane is expected to see a 1.11 MMB draw in today’s report
Natural Gas
- Natural Gas is higher again this morning. April, May, and June all saw new contract highs
- 8-14 day forecast is looking cooler throughout much of the US
- US storage is 17% below the five-year average. Production is still below 96 bcf per day
Crude Inventories Vs Price: As we have seen continued draws from reserves and storage we have seen an increase in futures price. With the lack of production and returning demand reserves have been depleted to levels not seen since 2002.
