Outlook: Energies are seeing steep losses for the second consecutive day with bearish headlines paving the way. Russia and Ukraine had what was quoted as a constructive in-person meeting today which caused markets to fall swiftly. Russia has said they plan to decrease military activity near the capital and any signal of de-escalation had proven to have a significant impact on the market. Domestically, petroleum inventories are expected to see draws across the board. The API will report their inventory survey this afternoon to give us another look at what we might see in the EIA report tomorrow morning. An area of focus will be on US production, as it has lagged behind with increasing rig counts week-over-week. There is a growing priority to become more energy independent after banning Russian imports.
Crude
- Russia and Ukraine met in person for meetings in Turkey today to discuss a ceasefire.
- Russia’s Medinsky said the talks were constructive. Oil fell over 6 dollars immediately following the comment.
- Russia has said it will drastically reduce military activity near Kyiv and Chernihiv.
- Saudi Arabia and the UAE have said the US must trust OPEC+’s strategy ahead of the scheduled meeting for Thursday.
- Kazakhstan’s Tengiz and Karachaganak oil fields cut production over the weekend due to the storm damage to the CPC pipeline with Reuters reporting each oil field was down 37%(Tengiz) and 11%(Karachaganak.)
- OPEC+ is expected to stick with their 430,000 bpd production increase for May.
- Reuters is estimating a 1.6-million-barrel draw in crude stocks for last week.
- The API will release its inventory survey at 3:30 CST.
- As of 10:05 am CST: Brent crude oil down $3.58 to $108.90, US dollar index down $0.764 to 98.327 while the nearby e-mini S&P 500 futures contract is up 31.00 to 4599.00.
Diesel
- The EIA reports retail diesel prices rose 1% last week to $5.185
- Reuters is estimating a 1.7-million-barrel draw in diesel stocks for last week.
Gasoline
- The EIA reports retail gas prices fell .3% to $4.078 for last week.
- Saudi Aramco announced a 2-year partnership with Hyundai to develop an optimal fuel formulation to lower CO2 emissions of a vehicle.
- Reuters is estimating a 1.9-million-barrel draw in gasoline stocks for last week.
Propane
- Conway is trading at $1.3750 and Belvieu is trading at $1.4000.
- The US is currently exporting around 48% of total production.
Natural Gas
- Total US demand increased by 3.1 Bcf/d yesterday to 88.6 Bcf/d.
- Overnight weather runs removed 5 HDDs from the two-week forecast.
Daily WTI: Crude has seen additional volatility on headline risk today. Following the news of constructive talks between Russia and Ukraine, crude dipped to a low of $98.44. The 50-day moving average along with trend-line support has been tested with today’s dip.
