Outlook: Over the weekend President Biden stated that the US would militarily defend Taiwan if its neighbor China chose to invade. The markets are cautiously lower to even today as a result. The overall sentiment is that the world is still very short of supply and not adding new production fast enough to keep up. In Europe, the headlines are all about Natural Gas where Poland and Finland are no longer receiving flows from Russia.
Crude
- China continues to import crude from Russia and looks to increase the number of barrels it brings in.
- Saudi Arabia is standing behind Russia’s commitment and membership in OPEC+.
- Hungary demands investment from the EU to assist in a ban on Russian oil imports before it will support the ban.
- Global floating storage fell 15 % last week.
- Last week crude saw its fourth consecutive weekly gain on tight supplies and a weaker dollar.
- President Biden stated that the US would defend Taiwan with military force if China chose to invade.
- Spec funds are still very long and continuing to add to those positions as the oil and fuel shortage worsens globally.
- As of 9:12 am CST: Brent crude oil is up $0.02 to $112.57, the US dollar index down $0.924 to 102.229 while the nearby e-mini S&P 500 futures contract is up 24.5 to 3924.00.
Diesel
- The US is considering dipping into the Northeast Home Heating Oil Reserve. It was created in 2000 and has only been used in 2012 since. The impact is likely to be minimal as the reserve only holds 1 million barrels.
- Reports are circulating that the US will increase refinery capacity by 379,000 barrels this week.
Gasoline
- Implied demand was over 9 million barrels last week showing that consumers are still driving and increasing their travel.
- The four-week moving average of demand was at its highest point this year so far.
Propane
- Conway is down slightly this morning at $1.1900
- Storage levels continue to grow and be healthy providing stability to the market.
Natural Gas
- Flows have stopped into Poland and Russia stopped flows into Finland over the Ruble payment dispute.
- European gas prices are at 3-month lows today.
- European imports are up 70% YTD and are allowing countries to wean themselves from Russian gas.
West Texas Oil: The US continues to add rigs to its production capabilities. Something to keep in mind is that these oil wells are not always equally added by region. In this case, West Texas has added the most and this also happens to be the area of the country with the most severe drought. As the conditions get drier the risk of fires grows and also raises the risk of shutdowns due to fires.
