Outlook: Energies are trading lower to start the morning, but they are on pace for their first weekly gain in three weeks. Reports that the European Union decided against a Russian energy embargo along with some flows returning to the Caspian pipeline are helping push markets lower. The IEA including the US is considering another release of global SPR to buy time in efforts to replace Russian energy. The US has struck a deal with the EU to boost the supply of LNG to Europe to at least 15 bcm by the end of 2022. This is a first step in the direction of helping the EU decrease its dependence on Russian energy. OPEC is scheduled to meet on March 31st where they will discuss oil market conditions and decide whether to adjust their 400,000 bpd increase. OPEC members do have the spare capacity to provide short-term relief but have taken the stance that the long-term effects of boosted production will be more severe.
- The European Union decided against a Russian Oil Embargo.
- The Caspian pipeline, which was damaged due to a storm, has resumed flows.
- Russian refiners had almost 1.13 million barrels a day of primary processing capacity offline as of Wednesday.
- Saudi Arabia’s defenses destroyed 9 bomb-laden drones that were targeting civilian objects and energy sources throughout the region Friday.
- OPEC+ will meet on March 31st to discuss global oil markets and whether to adjust their 400,000 bpd increase.
- The IEA and the US are considering another release of global SPR.
- The US Strategic Petroleum Reserve is at its lowest level since May 2002.
- Baker Hughes will report their rig count at 12:00 CST.
- As of 9:30 am CST: Brent crude oil down $2.08 to $116.95, US dollar index up $0.100 to 98.689 while the nearby e-mini S&P 500 futures contract is up 16.00 to 4528.50.
- Diesel demand grew by 326,000 barrels last week while inventories remain at 8-year lows.
- AAA shows the average diesel price at the pump at $5.079
- Gasoline inventories may tighten quickly as refiners see greater profits producing diesel due to the price premium.
- AAA shows the national average regular-grade gasoline price at the pump at $4.2436.
- Conway is trading down 3.5 cents at $1.4300 and Belvieu is trading down 3.5 cents at $1.4400.
- The US is currently exporting around 48% of total production.
- The EIA reported a 51 Bcf draw.
- The US and EU confirmed a deal this morning to reduce European dependence on Russian gas.
- The US will attempt to supply 15 bcm of LNG to Europe by the end of 2022.
- Total US demand increased by 3.1 Bcf/d yesterday to 97.2 Bcf/d.
- Overnight weather runs added 2 HDDs from the two-week forecast.
US Strategic Petroleum Reserve: The US SPR saw a draw of 4.19 million barrels last week with current inventories at levels last seen in 2002. Concerns over how these inventories will be replenished grow with every draw, as US production struggles to keep pace with growing demand.