Morning Highlights
Morning Highlights

4-13-2022 Energies Rally Prior to EIA Report


Michael Dix

Apr 13, 2022

 

 

Outlook: Energies are trading higher this morning ahead of the EIA report. Russian oil is struggling to reach the market and production is down 1 million barrels per day. The IEA expects Russian oil production to decline by 3 million barrels per day. This comes as natural gas flows into Europe from Russia are declining. The market has priced in most of the SPR releases and has risen back to the predicted trend range.    

Crude

  • President Putin said that Russian exports can be shut off from the west and redirected to other countries
  • The IEA cuts its oil demand forecast even as China opens up some of their lockdowns
  • Indian refineries are upset due to the fact that they are still paying near full price for Russian crude oil while it is being discounted up to $40 in Europe
  • The EIA will release its inventory report at 9:30 CST
  • Reuters is expecting an 863,000 barrel build in crude. The API is expecting a 7.76 million barrel build
  • Shale fields in west Texas are in worsening fire conditions as the drought continues
  • Permits for Permian drilling skyrocketed last month with 904 permits being awarded, this does not signal an increase in wells as financing and construction has to take place prior to production.
  • As of 9:14 am CST: Brent crude oil is up $1.67 to $106.30, US dollar index is up $.151 to 100.440 while the nearby e-mini S&P 500 futures contract is up 3 to 4396.00

Diesel

  • Reuters projects a 515,000 barrel draw while the API expects a 4.96 million barrel draw
  • Further draws continue to tighten the supply of diesel which is already low

Gasoline

  • Reuters projects a 388,000 barrel draw while the API expects a 5.05 million barrel draw
  • Gasoline supply has remained healthy and within the five-year average. Prices picked up after the API predicted a massive draw.

Propane

  • Propane is expecting a 100,000 barrel build this week
  • Conway is at 1.2900 and Belvieu is at 1.3250

Natural Gas

  • The market is being supported and moving higher on the news that Nat Gas flows from Russia will decrease again today
  • The Reuters poll is projecting a range of a 16 bcf build to a 33 bcf draw

OPEC Compliance: Despite $100 per barrel of oil OPEC has continued to increase in compliance (now at 159%) and reduce its production in relation to its quota.  There may have been more of an incentive to produce more if the US and the IEA had not released as many SPR barrels to the market.