Morning Highlights
Morning Highlights

4-6-22 Energies Look for Morning Direction


Michael Dix

Apr 6, 2022

 

 

Outlook: Energies are bouncing around even this morning with the gains from early this morning being wiped out. The US and its allies continue to release SPR barrels with an additional 60 million announced this morning. This is helping manage prices at the pump in the short-term, in the long-term the problem of limited supply remains. Europe is slowly cutting itself off from Russian energy products though several countries are not in favor of abandoning the relationship. Top executives from US petroleum companies will testify in DC today to shed more light on the current economic impact of the energy shortage.

Crude

  • The EU has banned the imports of Russian coal while the union weighs further energy sanctions
  • Hungary, an EU member, has not and will not support sending troops or weapons to Ukraine. The Country also has voiced its opposition to sanctions on Russia
  • US-allied nations in the IEA have announced they will release an additional 60 million barrels of SPR reserves
  • Russian storage facilities could be full within 50 days. There are 200 million barrels of temporary storage in Russia in pipelines and ships.
  • Chinese state refiners are not signing new contracts with Russian oil producers
  • The EIA will release inventory numbers today at 9:30 am CST. Reuters is suggesting a 2.1 million barrel draw. The API is predicting a 1.08 million barrel build.
  • As of 9:04 am CST: Brent crude oil is down $.36 to $106.30, US dollar index is down $0.015 to 99.456 while the nearby e-mini S&P 500 futures contract is down 60.75 to 4460.50.

Diesel

  • The Reuters poll is suggesting an 800,000 barrel draw. The API is predicting a 593,000 barrel increase.
  • Inventories remain at five-year lows. Increased refinery utilization could help out

Gasoline

  • The Reuters poll is suggesting a build of 100,000 barrels. The API is predicting a 543,000 barrel draw
  •  Gasoline inventories are in line with the five year average unlike crude and ULSD

Propane

  • Propane stocks are seeing around a 75,000 bbl build for the week ending April 1st
  • Current inventories are 21% below average and are below the ten-year low.

Natural Gas

  • The Reuters poll is suggesting a 44 to 19 bcf draw.
  • The moves higher yesterday were in response to bans on Russian coal and a decrease of an average of 8.2% per day since the first of the month.  

US Crude Production: Increased production is on the minds of many these days as prices continue to be seen at very high levels. BNEF is predicting that in 2023 the US will produce 13.1 million bpd. This is a result of higher profitability in the market. Fears of government interference are holding some back at this point to immediately attempting to provide more supply to the market.