Released February 18, 2022 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--Mr. Oil Market is sliding--like a curling stone across the Olympic ice--back down to the $90 level.
Click on the image at right for a glimpse at WTI and Brent crude oil prices.
These losses after IIR's Crude & Products Market Scorecard earlier this week reported it seemed that the sky is falling, the sky is falling. To some experts it appears an invasion of Ukraine by Russia is imminent. Days away, in fact. And then calamity will ensue among nations as they respond, in their fashion, to Russian aggression. But also in markets, which already are struggling with rampant inflation. And oil would be going to $100 and higher. Then would common sense and rational minds enter the picture? Doubt it. The sky would have fallen, and many will be struggling to make sense of what lies in store as the world spins on in a new world order.
Now as this week winds itself down, some of the geopolitical risk premium in these volatile energy markets is indeed less, though the Russia-Ukraine crisis has not yet resolved itself. Will there be conflict? Nobody truly knows.
CNBC: Russia now has over 150,000 troops near Ukraine, U.S. official says, amid reports of more attacks
CNBC: Treasury yields fall as investors monitor Russia-Ukraine crisis
U.S. Treasury yields fell Thursday, as investors monitored developments on the Russia-Ukraine crisis.
The yield on the benchmark 10-year Treasury note gave up 8.2 basis points, falling to 1.963% at around 4:05 p.m. ET. The yield on the 30-year Treasury bond moved 6.8 basis points lower to 2.296%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
But it is not just U.S. markets which are rattled and wracked with uncertainty...
Axios: If Putin invades Ukraine, the whole world will feel it
A war in Ukraine--even a short one, even with no U.S. troops on the ground--would ripple throughout the global economy and challenge the international order the U.S. spent decades constructing and defending.
Why it matters: Every time Vladimir Putin provides the slightest hint of his intentions toward Ukraine, markets move and heads of state scramble.
Though, there might be more supply--though not anytime soon--making its way into the world as hopes rise on an Iranian deal taking shape.
Reuters: Oil extends losses as heads for weekly fall on Iranian oil hopes
Oil prices extended losses on Friday and were heading for a weekly fall as the prospect of increased Iranian oil exports eclipsed fears of potential supply disruption resulting from the Russia-Ukraine crisis. ...
Fears over possible supply disruptions resulting from the Russian military presence at Ukraine's borders have limited losses this week.
However, a deal taking shape to revive Iran's 2015 nuclear agreement with world powers lays out phases of mutual steps to bring both sides back into full compliance, and the first does not include waivers on oil sanctions, diplomats say. Read more.
Consequently, there is little chance of Iranian crude returning to the market in the immediate future to ease current supply tightness, analysts said.
And OPEC+--which is struggling with compliance to the supply they have promised the market--would then seek to bring Iranian oil into their supply deal.
Reuters: OPEC+ would seek to bring Iran into oil supply deal
OPEC+ will work to integrate Iran into its oil supply-limiting accord should agreement be reached on reviving its nuclear deal with world powers, sources close to the group said, seeking to avoid market share competition that could hit prices.
A successful outcome to the talks could lift U.S. sanctions on Iran's exports, according to the International Energy Agency, potentially bringing 1.3 million barrels per day (BBL/d) of Iranian oil back into the market. That could ease tight global supply and take some heat out of a rally that has taken benchmark prices to just a few dollars short of $100 a barrel. Read more.
Stateside inventories rose, even amid record fuel demand.
Reuters: U.S. crude stockpiles rise despite Cushing draw, record fuel demand - EIA
U.S. crude oil stockpiles rose unexpectedly last week, even as inventories at the key Cushing hub dropped to their lowest level since 2018, the Energy Information Administration said on Wednesday.
Fuel stocks fell and demand surpassed the previous week's record, with total product supplied over four weeks averaging 22.1 million barrels per day, according to the EIA. The U.S. economy has recovered rapidly from the coronavirus-induced recession, boosting demand for fuels.
Click on the images at right to see the U.S. Energy Information Administration's (EIA) Petroleum Status Report and the EIA's crude oil inventory survey.
IIR/DOE Weekly Refinery Report for the Week Ending on February 11th, 2022
The prospect for war between Russia and the Ukraine has driven crude oil to levels not seen since September 2014. In a global market where demand growth already is exceeding production gains--and there are questions about other producers' ability to rapidly ramp up production--any disruption of oil or natural gas from Russia likely will have global repercussions. Independent refiners and the refining units of integrated supermajors reported strong Q4 and full-year 2021 results, as demand for refined products grew while travel restrictions eased. However, inflation continues to grow at its fastest pace in four decades, which could move the Federal Reserve to increase interest rates by a larger amount and at a faster pace than the market expects. COVID-19 cases continued to fall, leading some states, counties and cities to remove indoor mask orders. U.S. crude oil production rose 100 kbd to 11.6 mbd for the week ended February 4. Drillers are reporting such strong demand for frac sand that the price of that critical fracking ingredient has risen sharply; some drillers report an inability to get any sand at any price. U.S. oil production is expected to average about 12 mbd this year and 12.6 mbd in 2023, according to the EIA's just-released Short-Term Energy Outlook. Against this backdrop, U.S. crude oil inventories rose ▲ 1.1 million barrels to 411.5 million barrels for the week ended February 11, the DOE said today.
Circling back to Russia-Ukraine crisis, it could bode well for U.S. energy--especially for producers in the plays.
CNBC: Putin's threats against Ukraine could reinvigorate the U.S. oil and gas industry
Reuters: Permian oil output forecast to hit record high in March -EIA
Oil output in the Permian in Texas and New Mexico, the biggest U.S. shale oil basin, will rise 71,000 barrels per day (bpd) to a record 5.205 million BBL/d in March, the U.S. Energy Information Administration (EIA) said in its productivity report on Monday.
Total output in the major U.S. shale oil basins will rise 109,000 bpd to 8.707 million bpd in March, the most since March 2020, the EIA projected.
Your feedback is very important to us. Please let us know if we may provide additional color or answer any other market questions you may have by replying to this note. Additional IIR Resources:
Ask us! We have answers!!
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
These losses after IIR's Crude & Products Market Scorecard earlier this week reported it seemed that the sky is falling, the sky is falling. To some experts it appears an invasion of Ukraine by Russia is imminent. Days away, in fact. And then calamity will ensue among nations as they respond, in their fashion, to Russian aggression. But also in markets, which already are struggling with rampant inflation. And oil would be going to $100 and higher. Then would common sense and rational minds enter the picture? Doubt it. The sky would have fallen, and many will be struggling to make sense of what lies in store as the world spins on in a new world order.
Now as this week winds itself down, some of the geopolitical risk premium in these volatile energy markets is indeed less, though the Russia-Ukraine crisis has not yet resolved itself. Will there be conflict? Nobody truly knows.
CNBC: Russia now has over 150,000 troops near Ukraine, U.S. official says, amid reports of more attacks
- The Ukrainian government and Russian state-controlled media exchanged fresh accusations of cease-fire violations near the country's eastern border on Friday.
- Michael Carpenter, U.S. ambassador to the OSCE, said on Friday that the U.S. estimated Russia had amassed between 169,000 to 190,000 military personnel near Ukraine--up from 100,000 on January 30.
- U.S. Secretary of State Antony Blinken warned at a U.N. Security Council meeting on Thursday that Russia plans to "manufacture a pretext for its attack" on Ukraine.
CNBC: Treasury yields fall as investors monitor Russia-Ukraine crisis
U.S. Treasury yields fell Thursday, as investors monitored developments on the Russia-Ukraine crisis.
The yield on the benchmark 10-year Treasury note gave up 8.2 basis points, falling to 1.963% at around 4:05 p.m. ET. The yield on the 30-year Treasury bond moved 6.8 basis points lower to 2.296%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
But it is not just U.S. markets which are rattled and wracked with uncertainty...
Axios: If Putin invades Ukraine, the whole world will feel it
A war in Ukraine--even a short one, even with no U.S. troops on the ground--would ripple throughout the global economy and challenge the international order the U.S. spent decades constructing and defending.
Why it matters: Every time Vladimir Putin provides the slightest hint of his intentions toward Ukraine, markets move and heads of state scramble.
Though, there might be more supply--though not anytime soon--making its way into the world as hopes rise on an Iranian deal taking shape.
Reuters: Oil extends losses as heads for weekly fall on Iranian oil hopes
Oil prices extended losses on Friday and were heading for a weekly fall as the prospect of increased Iranian oil exports eclipsed fears of potential supply disruption resulting from the Russia-Ukraine crisis. ...
Fears over possible supply disruptions resulting from the Russian military presence at Ukraine's borders have limited losses this week.
However, a deal taking shape to revive Iran's 2015 nuclear agreement with world powers lays out phases of mutual steps to bring both sides back into full compliance, and the first does not include waivers on oil sanctions, diplomats say. Read more.
Consequently, there is little chance of Iranian crude returning to the market in the immediate future to ease current supply tightness, analysts said.
And OPEC+--which is struggling with compliance to the supply they have promised the market--would then seek to bring Iranian oil into their supply deal.
Reuters: OPEC+ would seek to bring Iran into oil supply deal
OPEC+ will work to integrate Iran into its oil supply-limiting accord should agreement be reached on reviving its nuclear deal with world powers, sources close to the group said, seeking to avoid market share competition that could hit prices.
A successful outcome to the talks could lift U.S. sanctions on Iran's exports, according to the International Energy Agency, potentially bringing 1.3 million barrels per day (BBL/d) of Iranian oil back into the market. That could ease tight global supply and take some heat out of a rally that has taken benchmark prices to just a few dollars short of $100 a barrel. Read more.
Stateside inventories rose, even amid record fuel demand.
Reuters: U.S. crude stockpiles rise despite Cushing draw, record fuel demand - EIA
U.S. crude oil stockpiles rose unexpectedly last week, even as inventories at the key Cushing hub dropped to their lowest level since 2018, the Energy Information Administration said on Wednesday.
Fuel stocks fell and demand surpassed the previous week's record, with total product supplied over four weeks averaging 22.1 million barrels per day, according to the EIA. The U.S. economy has recovered rapidly from the coronavirus-induced recession, boosting demand for fuels.
IIR/DOE Weekly Refinery Report for the Week Ending on February 11th, 2022
The prospect for war between Russia and the Ukraine has driven crude oil to levels not seen since September 2014. In a global market where demand growth already is exceeding production gains--and there are questions about other producers' ability to rapidly ramp up production--any disruption of oil or natural gas from Russia likely will have global repercussions. Independent refiners and the refining units of integrated supermajors reported strong Q4 and full-year 2021 results, as demand for refined products grew while travel restrictions eased. However, inflation continues to grow at its fastest pace in four decades, which could move the Federal Reserve to increase interest rates by a larger amount and at a faster pace than the market expects. COVID-19 cases continued to fall, leading some states, counties and cities to remove indoor mask orders. U.S. crude oil production rose 100 kbd to 11.6 mbd for the week ended February 4. Drillers are reporting such strong demand for frac sand that the price of that critical fracking ingredient has risen sharply; some drillers report an inability to get any sand at any price. U.S. oil production is expected to average about 12 mbd this year and 12.6 mbd in 2023, according to the EIA's just-released Short-Term Energy Outlook. Against this backdrop, U.S. crude oil inventories rose ▲ 1.1 million barrels to 411.5 million barrels for the week ended February 11, the DOE said today.
Circling back to Russia-Ukraine crisis, it could bode well for U.S. energy--especially for producers in the plays.
CNBC: Putin's threats against Ukraine could reinvigorate the U.S. oil and gas industry
- Russian President Vladimir Putin's threatened invasion of Ukraine has given a boost to oil prices, and if they go much higher, U.S. oil producers may be more willing to drill again.
- More U.S. natural gas was shipped to Europe in the form of liquified natural gas in January than the amount that flowed through Russian pipelines, making the U.S. a bigger supplier for the first time, according to IHS Markit.
- U.S. oil companies have been much more conservative about drilling because of their increased focus on shareholders and the demand by investors that they give more funds back, but surging oil prices could ultimately be a catalyst for more drilling.
Reuters: Permian oil output forecast to hit record high in March -EIA
Oil output in the Permian in Texas and New Mexico, the biggest U.S. shale oil basin, will rise 71,000 barrels per day (bpd) to a record 5.205 million BBL/d in March, the U.S. Energy Information Administration (EIA) said in its productivity report on Monday.
Total output in the major U.S. shale oil basins will rise 109,000 bpd to 8.707 million bpd in March, the most since March 2020, the EIA projected.
Your feedback is very important to us. Please let us know if we may provide additional color or answer any other market questions you may have by replying to this note. Additional IIR Resources:
- IIR Team Email: iirteam@iirenergy.com
- enelyst oil markets IIR Crude Runs chat
- Latest IIR Crude & Products Market Scorecard
- Latest IIR PCGMI Weekly update video newscast
Ask us! We have answers!!
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
