The monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil jumped by $16.86 (+18.4%) to $108.50 per barrel in March. That increase occurred within the context of a marginally stronger U.S. dollar (broad trade-weighted index basis -- goods and services), the lagged impacts of January’s drop of 1.03 million barrels-per-day (BPD) in the amount of petroleum products demanded/supplied (to 19.7 million BPD, and accumulated oil stocks that has essentially “flat lined” below the bottom of the five-year-average range (March average: 413 million barrels).
Selected
highlights from the 1 April 2022 issue of OilPrice.com’s Oil &
Energy Insider include:
In a week that saw OPEC+ implementing its latest production increases and the United States announcing an unprecedented Strategic Petroleum Reserve (SPR) release, oil prices saw their largest weekly decline in more than two years. While the OPEC+ decision was far from a surprise, the readiness of the Biden administration to tame runaway fuel prices pushed Brent futures closer to the $100 per barrel mark. Despite the scope and ambition of Biden's latest move, it might not be enough to keep WTI below $100 per barrel as the sheer size of Russia’s potentially sanctionable 3 million b/d seaborne flow still looms over markets.
OPEC+ Sticks to Modest Oil Output Increases. In a meeting that lasted a mere 12 minutes, OPEC+
countries agreed
to add 432,000 b/d of production in May 2022 despite prospects of Russian
production faltering, resisting calls from the IEA and US to ramp up production.
US Launches the Largest-Ever SPR Release. The Biden Administration kickstarted
the largest-ever release of SPR crude in an attempt to bring down gasoline
prices, pledging to release 180 million barrels over the next six months,
equivalent to a steady 1 million b/d stream of crude.
Russia Doubles Down on its Ruble Threat. Russian President Vladimir Putin signed
a decree on Thursday (3/31) mandating buyers of Russian gas from ‘unfriendly
countries’ to open ruble accounts in Russian banks and use those accounts to
settle payments for gas delivered by Gazprom.
US Warns India Not to Buy Too Much Russian Oil. The US State Department started expressing
its discontent over India’s buying spree of heavily discounted Russian barrels,
saying that any tangible increase would put New Delhi at a ‘great risk’ as
Washington will try to restrict other countries’ purchases.
US Authorities Want More Ethanol in Gasoline. The Biden Administration is considering the temporary removal of restrictions on summer sales of higher-ethanol gasoline as a means to decrease gasoline costs across the country, reversing a previous decision to ban E15 as it contributes to smog in hot weather.
For other oil-related headlines, see the 4 April 2022 edition of The Energy Bulletin Weekly.
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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