There are more clear signs that the Biden administration's attempts to punish Russia by banning its oil have failed. Partly because, despite their best efforts, the US is still buying Russia's oil. No, not directly, but they are buying oil that has been laundered in India that has refined Russian blend and sold it back to the United States as products.
Russian oil has accounted for 40% of India’s oil imports at around 1.6 million barrels per day (mb/d) of million barrels per day (bpd). Now, according to the Energy Information Administration, US oil imports of India's oil product imports hit an all-time high, over 15k a day.
The EIA also had to lower their estimate for US oil production and increase their estimates for demand. The EIA reported Friday that U.S. crude production fell in February to 12.5 million barrels per day (bpd), its lowest since December. This comes as Baker Hushes reported the number of rigs drilling for oil in the U.S. stayed steady at 591 but was down by one in April in their fifth monthly decline in a row.
Oil prices are weak this morning, seemingly unmoved by the fact that the FOMC took over first Republic bank and sold the remnants to JP Morgan. Banking uncertainty and fears about a recession have held back well despite signs of tightening inventory and better-than-expected demand. We will wait to see what the Fed decides to do as they meet on May 2nd and May 3rd. Right now the Fed is expected to raise rates by another 25 basis points even though their previous interest rate increases seem to cause havoc in the banking system.
Despite all the turmoil, once again we should see crude supplies fall dramatically this week. All the signs suggest the gasoline demand is strong and we expect that diesel demand will remain strong as farmers are out in the field.
Natural gas prices are holding their own as below normal temperatures has kept demand strong. Globally there is growing unease about supply as the market realizes that last winter we dodged a bullet. Zero Hedge writes that, “The northern hemisphere experienced higher-than-average temperatures this past winter, which helped alleviate energy crunches and sent liquefied natural gas prices tumbling from record-high levels. Now the world’s largest gas buyer expects another price spike this year.
In an interview with Bloomberg, Yukio Kani, the chairman and CEO of Jera Co., expressed his concerns about another potential surge in LNG prices, attributing this to the increasing import capacity in Europe and China, along with potential severe weather risks.