Is this only the beginning of the energy market shock?
March 9, 2022
The API inventory report called crude oil stocks up 2.8 million barrels, gasoline stocks were down 2.0 million barrels and distillates stocks were down 5.5 million barrels.
The energy markets were nuts again on Tuesday as ULSD futures were up 50 cents per gallon as the US banned Russian energy imports. Diesel stocks have been on the low end of their range and that fact has just exasperated the situation for diesel which has moved aggressively away from gas that was only up 11 cents on the day. The market is selling off today and the old adage buy the rumor and sell the news appears true here today as prices rallied up hard on the possibility of a ban on Russian imports but as the rumors become fact the market has sold off and given back much of yesterday’s gains.
“We’re banning all imports of Russian oil and gas energy,” Biden told reporters at the White House. “That means Russian oil will no longer be acceptable in US ports and the American people will deal another powerful blow to Putin’s war machine.”
The Chief Executive of Occidental Petroleum said calls for US shale oil producers to increase production face significant supply chain challenges. Occidental CEO, Vicki Hollub , said a lack of materials, skilled labor and other supply chain troubles are not adequately recognized and place limits on the energy industry’s ability to deliver.
Even though the rig count has climbed for a record 19 months in a row, its growth has been slow and oil production is still far from pre-pandemic record levels as many companies focus on returning money to inventors rather than boosting output.
The Financial Times reported that the IEA is ready to release more oil to ease increasing energy prices.
S&P Global Financial Services VP, Roger Diwan, said the energy market shock is in the beginning stage. Global energy markets cannot absorb the loss of 4 million BPD of Russian petroleum exports.
The CEO of Saudi Aramco warned Tuesday the world is facing an energy security crisis currently. He noted that due to mixed messaging on the energy transition, there hasn’t been investment enough in oil and gas in recent years.