US Strategic Petroleum Reserve at Lowest Level Since 1987
May 17, 2022
Crude and RBOB futures did manages to trade higher in yesterday’s markets. Prices were lower in the morning trading hours due to poor economic data from China and the US. Prices rallied later in the day as news hit that China was easing lockdowns in Shanghai and the fact that gasoline stocks are below normal as the official summer driving season is rapidly approaching.
The US Department of Energy reported that crude oil stocks in the US emergency reserve drew by about 5 million barrels in the week ending May 13th. Stocks in the SPR fell to 538 million barrels, the lowest level since 1987. About 3.9 million barrels of sour crude was released into the market, while about 1.1 million barrels of sweet crude was issued.
The EU’s top diplomat, Josep Borrell, said the European Union had not yet found agreement on a sixth package of sanctions against Russia. Earlier, he said there were some “strong positions from some members states.”
The EIA reported that oil output in the Permian in Texas and New Mexico is due to increase 88,000 bpd to a record 5.219 million bpd in June. Total output in the major US shale oil basins will increase 142,000 bpd to 8.761 million bpd in June, the most since March 2020.
Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said a lack of refining capacity meant that gasoline and other oil products would remain expensive even if the world’s largest exporters produced more oil. He reiterated that there are “physical impediments that no producers can solve.”
There are a lot of things that are being tossed around in the news which could impact energy prices, China, recession, higher interest rates, supply shortages, and production etc. But it appears that the market really is focused on Russian President, Vladimir Putin and what he does. The war has not gone as planned and has now drug on to the point where the market has adding in a risk premium and settled into a range. Good news on some front ease prices in that range and bad news raises prices in that range. All Putin can do now is issue new threats to try and spur the market higher. Right now, the market is getting a new threat about what happens if Finland and Sweden join NATO and then the US led alliance strengthens their military infrastructure. Putin says Moscow will response. The market will continue to wait and watch to see if any concrete actions take place.