Outlook: Energies are mixed today after seeing a significant sell-off yesterday. The EU is continuing talks with Hungary in an effort to put a stamp on their proposed Russian oil and refined product embargo. The EU also announced yesterday they were dropping the proposed ban against hauling Russian products to non-EU members with many members expressing concern over the importance of shipping for their economies. Saudi Arabia and the UAE again reiterated what has been evident for a while in that spare capacity is falling, and a lack of investment in production is causing continuous disruptions. Additional supply is flowing out of the US with 1 million bpd being released from the SPR starting last week. There were concerns over the aged infrastructure being able to handle the elevated flow, but it appears to be holding up. Despite the release of the SPR, Reuters is estimating draws across the board in this week’s EIA report. Elevated exports continue to send reserve oil and products overseas and domestic inventories continue to tighten.
Crude
- The EU has dropped its proposed ban on transporting Russian crude to non-EU members.
- Hungarian Prime Minister met with the EU about proposed oil sanctions but failed to make a breakthrough. Hungary continues to block the embargo.
- The oil ministers of Saudi Arabia and the UAE warned that spare capacity is decreasing in all energy sectors.
- The UAE made additional statements regarding the lack of investment in oil production catching up with producers.
- The US Strategic Petroleum Reserve fell by 1 million bpd last week.
- 25 delta skews flipped back to a put bias for the first time since the middle of February on Monday.
- 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 8:40 am CST: Brent crude oil up $0.05 to $105.99, US dollar index down $0.005 to 103.656 while the nearby e-mini S&P 500 futures contract is up 61.00 to 4048.00.
Diesel
- Reuters is estimating a 1.2 million barrel draw in diesel stocks for last week.
- AAA reports a new record high diesel price at the pump of $5.55
Gasoline
- Reuters is estimating a 1.8 million barrel draw in gasoline stocks for last week.
- AAA reports a new record high gasoline price at the pump of $4.374.
- The front-month RBOB-HO spread has increased by nearly 50 cents over the last week.
Propane
- Conway is trading at $1.2400. and Belvieu is trading at $1.2550.
- Propane fell 3-4 cents yesterday following the complex.
- The US is exporting 52% of production as of 4/29.
Natural Gas
- Total US demand rose by 1.07 Bcf/d yesterday to 86.2 Bcf/d.
- Yesterday marked the largest selloff since December 2005 with prices falling over a dollar.
- Reuters is estimating an injection between 68-85 Bcf last week.
Nearby NG: Natural gas saw historic volatility yesterday with the market trading in a 2 dollar range between Friday and Monday. The sell-off could have been the result of increased production over the weekend, steady gas flows moving from Russia to Europe, and repositioning after a bullish run.
