Outlook: Energy markets are higher this morning with an expected bullish EIA report at 9:30 am CST. Natural gas is leading the move higher and is now trading above $9. The supply and demand situation continues to add fuel to already bullish sentiment. The producers of the world are of the opinion that there is no shortage and that they should not increase production. This leads us back to find the price at which demand tapers off. Starting the higher demand season in the US at record prices for consumers has not had an effect on demand yet.
Crude
- Russia has proposed possible safe passageways through Ukraine for food and other essential products and people.
- Russia expects a 3% drop in oil loadings at ports
- Saudi Arabia claims that they have provided all the oil to the market that it can and added that there is not an oil shortage.
- European storage increased 7.5% week over week.
- German leadership said that an EU embargo on Russian oil is only days away.
- The API estimates that inventories rose 567,000 barrels last week.
- The US will move forward with its SPR release schedule and sell 40.1 million barrels in June through August.
- As of 9:17 am CST: Brent crude oil is up $0.80 to $114.38, the US dollar index up $0.386 to 102.246 while the nearby e-mini S&P 500 futures contract is up 10.25 to 3950.00.
Diesel
- The US demand for trucking and airline traffic is steadily increasing despite elevated prices.
- The Northeast diesel reserve is still a potential blow to the market as it could supply 1 million barrels.
- The API estimates that stocks fell 949,000 barrels
Gasoline
- US motor fuels are at their lowest supply levels since 2013.
- The US is looking at restricting exports in an attempt to curb prices at the pump.
- The API estimates that stocks fell 4.23 million barrels last week.
Propane
- Conway is up 1.25 cents at $1.2000 and MB is up ¼ of a cent at $1.1200
- Propane has not followed the run-up in oil or natural gas and now is a great time to look at locking in prices.
Natural Gas
- Flows are steady into Europe from Russia.
- The US is expecting a busy storm season this year with 21 hurricanes estimated.
- CDDs dropped 15 overnight
American Oil Production: The US will not reach pre-covid production levels until halfway through 2023 according to Bloomberg. Early estimates put that date in later 2022 and late estimates are showing 2024. Production returns have lagged behind demand recovery since the pandemic has eased leading to record-setting prices.
