Outlook: The energy complex is looking to resist pressure from a sharply higher US dollar this morning. Holding small gains, energies may be finding support from favorable economic data from Germany and the UK this week. Additionally, Russia reportedly launched over 150 missiles and drone attacks on Ukrainian energy infrastructure overnight. Despite the US’ call for Ukraine to stop targeting Russia’s oil infrastructure, fear of further escalation may add risk premium to the market ahead of the weekend. Russia’s crude processing rates have following to 10-month lows with over 7% of capacity knocked offline. If domestic prices begin to climb, Russia may need to look for imports if its gasoline embargo proves insufficient. The calls for higher energy prices have grown louder this week but it's worth keeping in the back of mind that OPEC+ has spare capacity, and voluntary cuts can quickly be lifted to stifle a rally.
Crude
- The US has urged Ukraine to halt strikes on Russian energy infrastructure due to the risk of driving up global energy prices, per the Financial Times. (Reuters)
- India will stop taking Russian oil delivered on Sovcomflot tankers after recent US sanctions. (Reuters)
- Yesterday, US senators introduced legislation to harden the ban on selling crude from the SPR to China. (Reuters)
- Alaska’s governor, Mike Dunleavy, said yesterday that Alaska currently has around 495,000 bpd of oil in the Trans-Alaska Pipeline system and expects to add another 2-300kbpd as production grows. (BBG)
- The Trans-Mountain pipeline still expects to be operable by May, according to comments at the CERAWeek conference this week.
- A sharply higher US dollar may look to limit gains today.
- Baker Hughes will report its oil rig count at 12:00 pm CT.
- As of 8:09 am CST: Brent crude oil up $0.22 to $86.00, US dollar index up $0.834 to 104.248 while the nearby e-mini S&P 500 futures contract is down 4.25 to 5298.00.
Diesel
- Gasoil stocks at Europe’s ARA hub fell 2.8% last week due to weak demand in inland markets up the Rhine river combined with slowing imports. (Reuters)
- Diesel may find support from liquidation of RBOB-HO spreads next week.
Gasoline
- Exxon Mobil’s Gravenchon oil refinery in northern France is running at 50% capacity following a fire last week.
- AAA reports the national average retail gas price at $3.53, up 10 cents from last week.
Propane
- Conway is trading at .7775 while Belvieu is trading at .8200.
- Conway Swap Oct24-Mar25 strip indicative midpoint ~.8300.
- Propane stocks rose unexpectedly by 352,000 barrels last week.
- Propane exports rose by 430,000 bpd to 1.7 mbpd last week and 68% of production was exported.
Natural Gas
- Overnight weather runs removed 2 HDDs in the two week forecast.
- The EIA reported nat gas stocks rose 7 Bcf to 2,332 Bcf last week.
- Natural gas stocks are 678 above 5-year average levels.
- 2 of 3 trains at Freeport LNG are being shut down for maintenance through May.
Continuous Weekly WTI: WTI failed to push through the 100-week moving average this week with the expiration of the April contract. The bias still feels bullish and any dips may be met with swift buying.
