Outlook: The market is up today following yesterday’s up and down pattern. The news of a ban on Russian oil imports and potential production increases is still fresh. Today we are looking ahead to tomorrow’s delayed inventory report due to the Memorial Day Holiday. The trend has been decreasing inventories despite higher prices. The gas and diesel implied demand will be important numbers to keep an eye on as they are likely the first signs of demand destruction.
Crude
- Yesterday, the EU announced its plan to ban Russian oil imports with a few exceptions by the end of 2022.
- Germany and Poland plan to stop pipeline flows from Russia by the end of the year as well.
- OPEC responded by possibly looking to suspend quota rules in an attempt to replace Russian losses with increases from Saudi Arabia and the UAE.
- The diesel tanker from Russia that was denied access to two different ports has finally found a destination on the western side of Spain.
- The API will release its projections today at 3:30 pm cst today.
- Reuters poll is predicting a 100,000 barrel decline in this week’s EIA inventory report.
- As of 9:33 am CST: Brent crude oil is up $1.67 to $117.20, the US dollar index up $0.678 to 102.430 while the nearby e-mini S&P 500 futures contract is down 29 to 4103.00.
Diesel
- The US airline traffic is 14% lower than in 2019, but 56% higher than last year.
- Jet fuel is in short supply and is well below the five-year average. This has led to increased costs for airlines and in turn higher ticket prices.
- The EIA report is predicting a 1 million barrel build for this week’s report.
Gasoline
- US consumers saw a nearly five-cent hike overnight in their price at the pump.
- US average price per gallon is $4.671
- The EIA is predicting a 300,000 barrel build for this week’s report.
Propane
- Conway is down 2 cents at $1.2250 Belvieu is down 2.75 cents at $1.2425
- Each hub saw third consecutive monthly losses.
Natural Gas
- Russia announced they will halt all gas flows to Norway, Germany, the Netherlands, and Denmark.
- Russian gas company Gazprom saw May exports reportedly drop by 28%.
- Reuters is predicting a build in the range of 76 bcf to 91 bcf
Russian Oil Discount: As Russia faces more and more scrutiny for its invasion of Ukraine countries are less keen on buying Urals (the Russian Crude Oil). This has led Russia to sell Urals at a discount and that discount keeps growing. Currently, a barrel of Ural crude is trading at around a $40 discount to Brent crude.
