02.28.2024 Energy

Feb 29, 2024
In this weeks EIA inventory report we learned diesel stocks decreased 500K barrels vs an estimated 2.1MB decrease, gasoline stocks decreased 2.8MB vs estimated 1.5MB decrease, propane stocks also decreased 3.4MB vs an estimated 2.1MB decrease. Crude oil stocks on the other hand increased 4.2MB vs the estimated 2.7MB increase. The primary driver behind diesel, gas, and propane inventory draws was increased domestic demand while production was lagging a bit, as for the crude oil increase experts are saying better refinery utilization along with refinery inputs increasing caused the product build.

In recent news from the US Dept. of Energy has put out bids to purchase 3MB of US crude for an August delivery into the Strategic Petroleum Reserve, you may remember the Biden administration sold off over 40% of the SPR in an attempt to limit rising fuel prices after Russia invaded Ukraine. This has our SPR stocks at their lowest level since the early 1980’s, currently sitting at 359MB versus the peak in 2009 of 727MB. The effect of this on the price of crude oil bears watching as most analysts are also predicting an increase in demand of petroleum products with continued lagging production into 2024. This coupled with high freight rates amid the Red Sea fiasco should keep Energy purchasers on their toes! Two items offsetting even higher prices are hopes of a ceasefire in Gaza and high interest rates, as these items evolve we anticipate finding definitive market direction.

My last tidbit of info is to report that Ford is slowing production of EV vehicles, their model E division lost $4.7 billion in the 4th quarter of 2023, Ford CEO Jim Farley stated mass EV adoption needs costs to be inline with traditional vehicles, as well as hope for new chemistries to lower the cost while increasing capacity of their batteries. I guess gasoline & diesel powered engines won’t become extinct anytime soon!
Thanks for reading!

Bill Pelzel
CRC Energy Manager