Outlook: Energies are trading much lower this morning as news of lockdowns in Shanghai circulates. There continue to be peace talks between Ukraine and Russia, but there has yet to be much progress made. Until we see significant news in the way of a ceasefire or peace agreement then we can expect the war premium to remain in the market. Volume and open interest are low again this week as speculators continue to pull out of the volatile marketplace.
Crude
- China has placed Shanghai (25 million Pop.) on lockdown to stop the spread of the Covid variant.
- Russian crude oil exports were down more than 25% week over week.
- There has been a pause in fighting from Houthis forces in Saudi Arabia as a three-day truce was announced.
- Russian oil tankers are going dark and not disclosing movements in an effort to conceal possible sanction violations
- The UAE voiced its opinion that Russia should continue its role in OPEC+ and remain an active member of the group
- The US said that there are no imminent plans to revive the Iran Nuclear Deal
- The Biden Administration is backtracking comments that the President made suggesting that Putin should be ousted.
- There was a fire at an oil refinery in Billings, Montana that has displaced 61,500 barrels per day
- As of 9:34 am CST: Brent crude oil is down $8.38 to $112.27, the US dollar index is up $0.481 to 99.271 while the nearby e-mini S&P 500 futures contract is down 3.0 to 4533.25.
Diesel
- Diesel is affected by the same things as Gas. Refinery usage is up from last year.
- However, the fire in Billings, Montana has disrupted 61,500 barrels per day until it is fixed and running
Gasoline
- Gasoline refinery usage rates are 6% higher than a year ago which should increase supply.
- Demand concerns globally especially in China are dragging the market lower this morning
Propane
- Canadian inventories are at their lowest levels in two years. That is 48% below 2021 levels
- Propane prices continue to follow crude and the rest of the energies.
- Propane is $1.4200 at Conway and Mt. Belvieu is $1.4450 both are off 4 cents to start today
Natural Gas
- The G7 reject Russian demands to pay for Nat Gas in Rubles
- Las week’s EIA report a 17.4% deficit compared to the five-year average.
- 4 HDDs were removed from the 2-week forecast.
Dailey WTI Crude: Today’s big move has broken lower out of the slight recovery trend from last week. Today’s current price is still higher than the 50, 100, and 200-day averages. There are not a large number of trades taking place and open interest is also low making large swing like we see very possible.
