Outlook: Energies are down sharply this morning as more economic concerns grip the market. A potential GAS Tax Holiday could be considered a sign of recession. In addition, interest rate hikes as well as the FED and US Government’s efforts to get inflation under control are still weighing heavy on the market and have allowed prices to slide. The decreased volume due to high volatility makes the situation worse as big moves are more likely to happen with fewer players in the market.
Crude
- Several Countries are looking at putting a cap on Russian oil in an effort to bring more supply to the market.
- WTI Crude has slid 6% for the second time in two weeks.
- Brent traded below the 100-day moving average for the first time since January.
- China’s demand is coming back, and their consumption will increase as well.
- With Chinese demand increases Russian has more outlets to sell discounted Urals.
- Experts warn that investment could stay flat or decline and well below 2019 levels as the industry looks ahead at potentially decreasing global demand in the future.
- The EIA will release its weekly inventory report tomorrow at 9:30 am CT.
- Reuters poll is predicting a 1.4 million barrel draw in inventories.
- As of 9:32 am CST: Brent crude oil down $5.38 to $109.26, US dollar index down $0.204 to 104.236 while the nearby e-mini S&P 500 futures contract is up 23.75 to 3790.00.
Diesel
- The Russian refinery that caught fire last month is still not up and running again.
- Reuters poll is estimating a 600,000 barrel build in inventories.
- Refinery runs are expected to increase 0.5%
Gasoline
- While US prices at the pump have stalled for the time being, prices in the UK and many parts of Europe set new all-time highs.
- Asian imports are set to break another monthly record.
- President Biden will ask Congress to pause the gas tax in order to provide relief at the pump for US consumers
- Reuters poll is estimating a 600,000 barrel draw in inventories.
Propane
- Propane is falling alongside the rest if the energy complex today.
- Potential export arbitration possibilities and smaller than expected builds could provide some support to the market.
Natural Gas
- European countries are starting to fear that Natural Gas flows from Russia could halt at any time. This could have a huge impact on the ability to heat homes this winter if not resolved.
- Old import facilities could provide a faster way for the US to export more LNG to the world.
- Reuters poll is estimating a 68-58 BCF build.
Refinery Margins: With the run-up in commodities, Gas and Diesel have swelled even more than crude. This has resulted in extreme profitability in the refining process as it relates to the price of crude oil.
