Outlook: Energies are starting the day in the red except for diesel which is hanging on to marginal gains. The US is in meetings with NATO today to discuss further sanctions towards Russia. An energy embargo for the EU has been talked about throughout the week, but several countries have spoken against the action. Self-sanctioning Russian energy has been spreading through countries that are less reliant on Russia, but countries like China and India have been taking advantage of the discounted Russian Ural. The world is scrambling to find replacements for Russian oil but with OPEC unwilling to add production, options remain limited. The US is seeking to boost domestic oil production, but progress has not been seen as inventories continue to fall well below seasonal averages.
Crude
- President Biden is meeting with NATO leaders in Brussels for emergency talks and to layout additional sanctions against Russia.
- White House national security adviser Jake Sullivan said on Wednesday the US had made progress in Iran nuclear talks, but key issues remain.
- Kazakhstan oil production is unaffected following storm damage to the Caspian pipeline which could stunt 1 million bpd of exports.
- China and India have purchased roughly 13 million barrels of Russian Urals since late February according to Bloomberg data.
- Japan’s top processors said they will stop importing Russian crude.
- The IEA says it’s ready to release more emergency barrels if needed.
- Crude inventories sit 13% below their seasonal average.
- The EIA reported a larger than expected draw of 2.5 million barrels for last week.
- As of 8:50 am CST: Brent crude oil down $1.01 to $120.59, US dollar index up $0.237 to 98.867 while the nearby e-mini S&P 500 futures contract is up 17.50 to 4464.50.
Diesel
- Diesel inventories remain 17% below seasonal averages and at 8-year lows.
- The EIA reported a draw of 2.1 million barrels.
- Air travel demand may take two more years before reaching pre-pandemic levels according to BloombergNEF.
Gasoline
- The EIA reported a draw of 2.9 million barrels for last week.
- Gas inventories remain in line with seasonal averages.
- AAA shows the national average regular-grade gasoline price at the pump at $4.236.
Propane
- Conway is trading at $1.4700 and Belvieu is trading at $1.4800.
- The EIA reported a surprise build of 300,000 barrels for last week.
- Propane inventories remain 24.7% below the 5-year average.
Natural Gas
- The EIA is expected to report a 62 Bcf draw.
- Total US demand increased by 7.2 Bcf/d yesterday to 96.4 Bcf/d.
- Overnight weather runs removed 4 HDDs from the two-week forecast.
Air Travel Demand: Air travel demand has been steadily increasing from its covid lows. Increasing jet fuel demand has put additional pressure on tightening diesel inventories. Covid outbreaks and lockdowns have slowed the demand recovery, but it’s estimated air travel will return to pre-pandemic levels by 2024.
