Written Commentary
CRUDE OIL
Crude oil prices have recovered half of their mid-March downdraft, as the market continues to see tight near-term supplies. While there have been few tangible signs of progress, there is some optimism regarding Ukraine/Russia negotiations and with an Iranian nuclear deal. An attack on Saudi refining facilities over the weekend has injected fresh supply anxiety into the energy markets early this week following comments from Saudi Arabia that they cannot be responsible for oil storage due to those attacks.
Both product markets extended their recovery moves with strong gains on Monday, with ULSD outpacing RBOB due to a relatively tighter near-term supply situation in the US. RBOB regained the upper hand this morning as it is holding its ground near unchanged while ULSD is down slightly. Euroilstock said that western European refining was up 10.8% last month from 2021 levels, indicating demand was strong in front of Russia’s invasion of Ukraine.
NATURAL GAS
While natural gas prices have been unable to retest last Thursday’s high, they remain well supported coming into this morning. May natural gas finished Monday with a modest gain. Reports that the Russian firm Gazprom had not booked gas transit capacity for export on the Yamal-Europe pipeline for April may have boosted prices late in the day. Support may be building for Euro zone nations to embargo Russian crude oil, but it would be much more difficult to do so for natural gas. Russia accounted for 45% of EU imports last year.
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