EU Announces Russian Crude Phase-Out
May 4, 2022
The European Union announced an agreement to phase out Russian crude oil over the next six months and refined fuel by the end of the year. This news has rallied the energy markets higher this morning. Hungary and Slovakia are exempt and have until the end of 2023 to comply.
The API inventory report showed that crude oil stocks were down by 3.5 million barrels. Gasoline stocks were down 4.5 million barrels, and distillate stocks were down 4.5 million barrels. This news also provided buying support after the numbers were released.
The average estimates for today’s DOE inventory report from the Bloomberg survey are crude stocks unchanged, gasoline stocks down 512,000, and distillates down 1.582 million barrels.
The core OPEC countries increased their output by just 40,000 BPD in April – less than 16% of their 254,000 BPD target. Russia’s production had fallen by 790,000 BPD during the first two weeks of April, which is more severe than Russian Deputy Prime Minister Alexander Novak’s initial estimates of 4% – 5%. Compliance rates also show less output, with April compliance at 164% for April versus 151% in March.
The average estimates for today’s propane inventory update are for stocks to build by 1.98 million barrels.
The Federal Reserve meets today to make its plans moving forward for interest rates. The market has priced in a 0.5% federal funds rate increase. The Fed is expected to raise rates and reduce its monetary stimulus to fight inflation.