Morning Highlights
Morning Highlights

4-25-22 Crude Sells Off to Start the Week


Michael Dix

Apr 25, 2022

 

 

Outlook: Energies are mixed this morning as crude sells off more than $5 nearby. ULSD is down mostly in the nearby while natural gas is up near 10 cents. Chinese lockdowns and more confirmed cases of Covid in Beijing are dominating headlines and creating bearish sentiment. Other stories driving the oil market are resumed operations in the Caspian Pipeline. Libya is expecting to resume planned production after protests had limited the country's oil output.

Crude

  • Chinese Lockdowns continue as Shanghai attempts to test every citizen.
  • Beijing has seen an outbreak and Shanghai saw a record for deaths in one day.
  • Libyan production is expected to resume at normal levels after several shutoffs due to protesters.
  • The Caspian Sea pipeline has also resumed flows after storm damage was repaired.
  • Russia's Rosneft failed to sell crude in its tender. This comes as Russia continues to struggle to export its oil and products.
  • A diesel storage facility in Russia was damaged 55 miles from the Ukrainian border.
  • A Russian oil tanker is blocked in a Norwegian port due to Greenpeace activists not allowing the ship to move.
  • As of 9:00 am CST: Brent crude oil is down $5.50 to $101.08, the US dollar index is up $.478 to 101.689 while the nearby e-mini S&P 500 futures contract is down 19  to 4248.25

Diesel

  • May ULSD has rejected the crude losses to trade only slightly lower this morning amid tight fundamentals. However June ULSD is down near 7.5 cents.
  • Net long positions have increased signaling a potential rally in the face of potential risk on trading sessions.

Gasoline

  • Gas futures put up a strong fight last week against crude, but today have followed along and traded lower.
  • There should be seasonal support coming in the next few weeks as summer travels pick up as schools dismiss for the summer.

Propane

  • 49.6% of production was exported last week.
  • Far east propane is down an implied 8 cents.
  • Propane continues to follow crude oil and not nat gas.

Natural Gas

  • China is looking to sell its spare LNG due to lockdowns.
  • Last week saw a larger than expected build in inventories and pulled the market back from 8 dollar highs.
  • Exports are still robust, but cannot see large growth due to limited facilities and capacity.

Congestion and Mobility Index: Despite lockdowns and stay-at-home orders Chinese traffic congestion saw an increase last week. The Google mobility index saw reductions in movements across all recorded regions.