⚡ Energized - WTI Roofs on Sanctions

WTI roofed once again and equities caught an afternoon bid to end on a positive note. Natural gas popped overnight just to give it all back by the time the market opened in NY.

Volatility is the name of the game. Probably good to get used to it.

~Doug​

What's in this issue:

• Energy Market Recap

• Sanctions Fever (Gas Version)

• Refinery Squeeze

• Headlines

🛢️Oil prices jumped another 3% yesterday as implications of the US sanctions set in. China and India were reported to be actively seeking cargos on the open market in a sign that they expect Russian exports will be affected.

As Jorge Montepeque, a managing director at Onyx Capital, told the FT:

​“One of the Indian refiners called someone I know to ask if they had had any cargoes of Oman crude. My source was surprised because Oman crude generally goes to China and Indian buyers have not bid for it for a couple of years.”

+India halts trade with US-sanctioned Russian companies and tankers - Reuters
+Dozens of oil tankers drop anchor after latest US sanctions bite - Reuters

​

WTI Spreads

Feb/Mar: +1.52

Mar/Dec: +7.34

Dec25/Dec26: +3.36

🔥Natural gas prices were lower by 1.4%, but that hardly told the whole tale of the day. Prices were up .30 overnight, trading above $4.30 before selling off into the open of the NY trading session.

Despite the sell off, the weather still looks cold and a large draw is possible for inventories on Thursday. NatGasWeather.com has this image posted:

Source: NatGasWeather.com​

​Sanctions Fever

On the heels of deeper sanctions on Russian oil out of the US, the EU is figuring out how to follow suit. Despite current sanctions and the closing of nat gas pipelines out of Russia, plenty of Russian gas is making it to Europe as LNG.

​Today, Bloomberg reported that 10 EU countries are pushing for tighter sanctions on Russia as well, stating:​

“As an end goal, it is necessary to ban the import of Russian gas and LNG at the earliest date possible,”

The group has also called for lowering the current price cap paid on Russian oil.

However, the block's reliance on nat gas coupled with Hungary's Viktor Orben willing to shoot down any firm measures means this is likely just talk for now.