Outlook: The energy complex bounced off of the lows yesterday and we are seeing a continuation today as all major energies are posting gains. Russia has not left the areas they said they would and continue to shell cities in the Kyiv area. We are starting to see a pattern where peace talks look productive and the market falls. As soon as it appears that there is not an imminent peace deal the market moves back higher. This trend could continue until a real peace deal is signed and agreed to by both sides. The EIA will release its inventory report this morning at 9:30CST
Crude
- Russia continues to bomb Kyiv and other cities despite claims that they were leaving the area.
- Poland is planning to significantly reduce its dependency on Russian energy. This in turn tightens supply from pipelines in Germany.
- OPEC+ is expected to ratify a 432,000 bpd increase in production in tomorrow’s meeting.
- Russian Ural barrels are still trading at a 30% discount to WTI
- The Kremlin has said that there have been no breakthroughs in peace talks yet.
- Reuters poll is predicting a 1 million barrel draw, meanwhile the API is calling for a 3 million barrel draw
- The EIA will come out with their inventory at 9:30 am cst today
- As of 9:17 am CST: Brent crude oil is up $4.05 to $114.28, US dollar index is down $0.609 to 97.793 while the nearby e-mini S&P 500 futures contract is down 8.00 to 4616.00.
Diesel
- Reuters poll is predicting a 1.55 million barrel draw, the API is calling for a 220,000 barrel draw
- If all war premiums were to be pulled out of the market, we could see a dip below $3 experts suggest
- Estimates are that 25% of Chinese jet fuel demand has been taken out due to lockdowns from covid
Gasoline
- Reuters poll is predicting a 1.75 million barrel draw, the API is calling for a 1.36 million barrel draw
- Chinese demand has been in a sharp decline in demand, nearly 14%, due to more lockdowns.
Propane
- This week has seen two days of consecutive losses of 4 cents.
- Conway is at $1.365 Mt. Belvieu is at $1.3625
- Inventories are low enough that if we have an average build season we would go into the next draw season at five-year lows.
Natural Gas
- The current inventories in the US are 17.2% lower than the five-year average.
- The market is trading significantly higher this morning as Europe nat gas prices remain strong.
- European countries continue to look for ways to be independent of Russian nat gas
Volatility: The last five weeks have seen 23 intraday moves of $5 or more. The last ten years combined have 23 days with those types of swings. As we move forward volatility looks to persist and continue on until the conflict in Ukraine is resolved.
