Outlook: Crude and products are seeing losses to start the day while natural gas has surged back over $8. The EU is set to review proposals for a Russian oil embargo today, following the bullish comments made yesterday that they could support the ban immediately. The indication is that the proposal would involve phasing out Russian products by the end of 2022. Putin responded today saying he could terminate exports and deals in response to the proposal moving forward. Despite these bullish indicators, Chinese demand continues to pull in the other direction. Additional lockdown measures in Beijing and rising cases are helping crude and products stay in the red. UK fuel demand has returned to near pre-pandemic levels. The US continues to export products overseas to meet higher-priced demand which is putting pressure on domestic inventories. Reuters is calling for draws across the board in this week’s EIA report.
- China continues to report new covid cases as lockdowns continue.
- Chinese oil demand is down more than 1 million bpd year-to-date with no signs of recovery according to Ed Morse of Citigroup.
- Russia boosted its exports or Urals crude by 500,000 bpd in April over March according to Bloomberg’s tanker trackers. Asia remains the primary buyer.
- EU members are expected to review proposals to phase out Russian oil today.
- Saudi Arabia’s crude exports rose to 7.1 million bpd in April, up from 6.8 million bpd in March according to Bloomberg.
- Stronger shipment demand in China, Egypt, and the US is helping drive up Saudi exports.
- The Fed meetings start today and run through Wednesday. Expectations are for a 50-point increase in interest rates.
- Reuters is estimating a 1.2 million barrel draw in crude stocks for last week.
- The API will report their inventory survey at 3:30 CST.
- As of 8:43 am CST: Brent crude oil down $1.28 to $108.30, US dollar index down $0.625 to 103.119 while the nearby e-mini S&P 500 futures contract is down 3.00 to 4148.00.
- The diesel crack margin has hit a new record high of $74.05.
- Reuters is estimating a 1.2 million barrel draw in diesel stocks for last week.
- Gasoline crack margins have hit $42.75, nearing the all-time high of $45.40 set in 2013.
- Reuters is calling for a 300,000 barrel draw in gasoline stocks for last week.
- Conway is trading at $1.2500 down 1.25 cents and Belvieu is trading at $1.2800 down 2 cents.
- Propane briefly fell over 4 cents yesterday before returning to near even by the end of the session.
- The US is exporting 56.5% of production as of 4/27.
- Total US demand increased by 3.3 Bcf/d yesterday to 87.7 Bcf/d.
- Inventories remain 305 Bcf below the 5-year average.
- Reuters is calling for an injection between 56-69 Bcf last week.
Diesel Exports: Refiners in the Gulf continue to send products overseas which has left inventories at decade-low levels on the east coast. Export demand will likely stay strong through the next few months as countries in South America burn diesel for power generation during their winter season.