Outlook: WTI crude has jumped to its highest levels since March as the bullish run this week continues. Energies have seen a boost this week following the EU announcing its proposal to phase out Russian crude and refined products by the end of 2022. Crude is seeing an additional bump today after the US reported they will seek to buy 60 million barrels of oil this fall to replenish the Strategic Petroleum Reserve. OPEC+ has remained steady with their production targets each month however they have not remained steady in meeting these targets. Operable capacity is an ongoing concern and will likely be a limiting factor in OPEC providing relief in the absence of Russian oil. US production was unchanged last week alongside a decrease in refinery utilization. The US continues to export crude and products while domestic inventories plunge, and prices steadily climb. Oil has surged more than 40% this year and the tightening supply environment appears to have no end in sight.
Crude
- OPEC+ will move forward with a 432,000 bpd production increase for June.
- The Senate Judiciary Committee is expected to approve legislation known as NOPEC today which would allow full senate consideration of US antitrust laws against OPEC for manipulating energy markets.
- OPEC+ increased production by 10,000 bpd in April according to Bloomberg data.
- The EU has proposed a ban on Russian crude and refined products which will aim to end imports by the end of 2022.
- The EU’s proposal would leave the market short by 1-1.5 million bpd toward the end of 2022 according to JPMorgan.
- The US has exported an average of 6.3 million bpd of petroleum products over the past four weeks, which is 22% higher year-over-year for the time period.
- The Biden administration plans to seek bids this fall to buy 60 million barrels of crude oil.
- The Fed announced a 50 basis point increase in interest rates yesterday.
- The EIA reported a build of 1.3 million barrels in crude stocks for last week.
- As of 9:03 am CST: Brent crude oil up $3.25 to $113.42, US dollar index up $0.790 to 103.377 while the nearby e-mini S&P 500 futures contract is down 89.00 to 4206.00.
Diesel
- East coast diesel inventories have slumped to their lowest level on record last week at 22.4 million barrels.
- The EIA reported a draw of 2.3 million barrels in diesel stocks for last week.
Gasoline
- Europe’s mobility index continues to climb, up 3.3% over the 4-week average.
- Pre-pandemic level demand is being reported in Europe, where the future absence of Russian imports may further strain fuel prices.
- The EIA reported a draw of 2.2 million barrels for gasoline stocks for last week.
Propane
- Conway is trading at $1.2850 up 1.25 cents and Belvieu is trading at $1.3100 up 1 cent.
- The EIA reported a build of 1.6 million barrels in propane stocks for last week.
- The US is exporting 52% of production as of 4/29.
Natural Gas
- Total US demand increased by 0.9 Bcf/d yesterday to 92.4 Bcf/d.
- The 5-year average build for this time of year is 78 Bcf.
- The EIA is expected to report an injection of 61 Bcf for last week.
OPEC+ Production: OPEC concluded their meeting today and is moving forward with a 432,000 bpd production increase for June. OPEC members have struggled to increase production with various struggles due to limited spare capacity. With Russian barrels leaving the market, it does not appear OPEC has the operable capacity to pick up the slack.
