It appears President Biden is about to have yet another big problem as gas prices at the pump will be above cycle highs within a week.
As Biden warmongers with Russia over Ukraine, the geopolitical risk premium rises and lifts crude prices (to 7 year highs) and wholesale gasoline prices.
All of which means within a week or two, gas prices at the pump are going to take out pre-Omicron highs.
Gas prices at the pump for this time of year have only been higher in 2012 and 2013… and even then it was only marginally higher. Given the chart above, we are well on our way to record seasonal prices…
The problem for Biden now is that SPR stocks are at their lowest since Oct 2002…
…leaving Biden with no supply ammo and apparently no geopolitical leverage to lower prices, as witnessed by today’s OPEC+ snub for increasing production.
And without being able to do anything about it (except maybe inventivize doemstic production and blow the minds of his progressive wing), we suspect the crossover in the chart below will continue to grow…
Ironically though, Russian crude deliveries into the U.S. are finally back after three weeks of no-shows. Volumes are still low though at just 20k b/d.
* * *
As we detailed earlier, oil prices have had a wild ride overnight and are now trading back below levels when the API inventory data hit last night (showing a surprise crude draw and another big gasoline build). The OPEC+ meeting appeared to go without any controversy, agreeing to the 40K b/d production hike as planned, which sent oil prices spiking notably (WTI almost $90)…
“That is what was expected, despite some rumors yesterday that OPEC+ might agree on a larger hike” said Carsten Fritsch an analyst at Commerzbank AG.
“They keep their powder dry for the time being.”
…but that has all been reversed now with some desks claiming Iran headlines (U.S. should ease its sanctions on Iran in order to help tightly supplied markets and ease prices, Iran’s Oil Minister Javad Owji says in comments to the state-run Shana news agency) may have been a driver of the reversal.
More likely is a lack of liquidity as all markets are fading at the same time.
API
- Crude -1.645mm (+1.833mm exp)
- Cushing -1.031mm
- Gasoline +5.816mm
- Distillates -2.508mm
DOE
- Crude -1.05mm (+1.833mm exp)
- Cushing -1.17mm
- Gasoline +2.12mm
- Distillates -2.41mm
The official data confirmed API’s – though to a lesser extent – with Crude stocks drawing down and Gasoline inventories rising for the 5th straight month…
Source: Bloomberg
Total crude stockpiles, including commercial inventories and crude held in the Strategic Petroleum Reserve, fell by more than 2.9 million barrels in the week to Jan. 28. On top of the 1 million barrel draw in commercial crude, another 1.87 million barrels were drawn out of the SPR.
Continue Reading: zerohedge.com
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