Russia’s average daily oil refining rate fell to the lowest weekly level in ten months after a flurry of Ukrainian drone attacks hit several major facilities.Refiners processed 5.03 million barrels a day of crude from March 14 to 20, according to a person with knowledge of industry data. That’s down more than 400,000 barrels a day from the average for the first 13 days of the month, according to Bloomberg calculations based on historical data. With Russia’s invasion of Ukraine in its third year, Kyiv is using drones to target its enemy’s key industry, seeking to curb fuel supplies to the front line and cut the flow of petrodollars into Kremlin coffers. The attacks this year have targeted 13 major refineries and two smaller plants, taking offline between 480,000 and 900,000 barrels a day of processing capacity, according to a Bloomberg survey.
Dnipro hydroelectric plant halts operations after missile strike
The Dnipro hydroelectric power plant (HPP), a crucial component of Ukraine’s energy infrastructure, ceased operations on Friday due to significant damage following a missile strike. Ihor Syrota, the director of Ukrhydroenergo, reported extensive damage to the plant’s turbine hall, rendering both stations of the Dnipro HPP inoperative. The incident is part of a broader series of attacks on Ukraine’s energy system, described by the Ministry of Energy as the largest in recent times.The national energy company Ukrenergo has announced emergency shutdowns in six regions, and the Ukrainian energy holding DTEK noted serious damage to thermal power plants across the country, leading to widespread power outages.
High-voltage line supplying Zaporizhzhia plant shut down…….. Russian strike targets Ukraine’s largest dam
One of the two high-voltage lines supplying the Zaporizhzhia nuclear power plant with electricity, “Dneprovskaya,” went down in the morning on Friday, the plant administration announced on its Telegram channel According to the report, the power plant is now supplied with electricity by a reserve line of 330 kV and there are no safety threats.It was also noted that the radiation at the plant and the surrounding area is unchanged and is at the level corresponding to the normal operation of power units and does not exceed natural background values. Earlier, different Ukrainian media outlets reported that repeated explosions were heard in the Ukrainian-controlled city of Zaporizhzhia.
Russian strike targets Ukraine’s largest dam
A Russian strike hit the DniproHES dam in Zaporizhzhia, Ukraine’s largest, on Friday, Ukraine’s state hydropower company Ukrhydroenerho said. The attack has led to a fire at the station. “There is currently a fire at the station. Emergency services and energy workers are working on the spot, dealing with the consequences of numerous airstrikes,” stated Ukrhydroenerho, which runs Ukraine’s network of dams. Despite the severe damage, there is reportedly no risk of a breach. The incident is part of what Ukraine’s Energy Minister, Herman Halushchenko, described as the largest recent attack on the nation’s energy infrastructure, aiming to cause a widespread failure of the energy system.In the western Khmelnytskyi region, a local official reported to public broadcaster Suspilne that one person was killed and more were injured due to the strikes. Additionally, the mayor of Kharkiv, Ihor Terekhov, announced that the city’s traffic light system had been disrupted following attacks on power facilities.
BlackMask Blog
At Some Point They Will Go For Broke
ING Sees Oil Prices Rising Further on Supply Risk
Oil markets will continue to tighten in the second and third quarters amid growing supply risks including the rollover of voluntary supply cuts from OPEC+ into Q2 2024, Ukraine’s recent attacks on Russia’s refineries as well as constant disruptions to oil flows through the Red Sea, ING Global Market Research has predicted. ING Global has hiked its oil price forecast from US$80/bbl to US$87/bbl for the second quarter and from US$82/bbl to US$88/bbl for the third quarter.Two days ago, J.P. Morgan reported that the attacks have sent 900K barrels of Russian refinery capacity offline and could add a risk premium of $4/bbl to oil price while StoneX energy analyst Alex Hodes has predicted that the attacks on Russian refineries could potentially cut ~350K bbl/day of global petroleum supplies and boost oil prices by $3/bbl. Meanwhile, ING Global has predicted that interest rate cuts by the Fed are likely to lead to an increase in speculative interest in the oil futures market. According to ING, long positions have increased significantly in the current year compared to the previous year from around 100k lots to a little over 230k lots currently. ING, however, has pointed out that positioning remains fairly modest compared to pre-2022 levels despite the unfolding risks hanging over the markets. ING says it’s possible that OPEC’s large spare capacity is making speculators worry that oil prices have limited upside. Several other analysts share a similar sentiment. Standard Chartered, on the other hand, says OPEC+ has ample room to maneuver without upsetting the balance in oil markets. According to StanChart, a 0.9 mb/d increase in output by OPEC in the third quarter would still leave the global market with an inventory draw of 0.5 mb/d for the quarter on top of the 1 mb/d draw across H1-2024. The analysts reckon that OPEC can hike Q3 output by as much as 1.5 mb/d Q/Q without increasing inventories. NN: As you can see you can find any opinion you want.
Israel: US opposition will not stop Rafah operation
Israeli Strategic Affairs Minister Ron Dermer (pictured) insisted on Thursday that his country’s army will continue its operation in the Gazan city of Rafah until it claims it despite the United States’s opposition to that .Speaking on the Call Me Back podcast, Dermer stressed the importance of capturing Rafah as it shelters a quarter of Hamas’s members. He added that Israel is willing to learn the US’s stance on the matter but that the operation must be concluded even if an agreement on evacuating civilians from there is not reached. The minister’s comments came a day ahead of US Secretary of State Antony Blinken’s visit to Israel.
Fed Signals Three Rate Cuts Are Still Likely, Despite Inflation Uptick
Federal Reserve officials maintained their outlook for three interest-rate cuts this year and moved toward slowing the pace of reducing their bond holdings, suggesting they aren’t alarmed by a recent uptick in inflation.Officials decided unanimously to leave the benchmark federal funds rate in a range of 5.25% to 5.5%, the highest since 2001, for a fifth straight meeting. Policymakers signaled they remain on track to cut rates this year for the first time since March 2020, but they now see just three reductions in 2025, down from four forecast in December, based on the median projection. Chair Jerome Powell, speaking to reporters after the Fed’s decision Wednesday, demurred when asked whether officials would lower rates at their coming meetings in May or June, repeating that the first reduction would likely be “at some point this year.”
He largely shrugged off recent data showing an uptick in inflation in recent months, saying, “It is still likely in most people’s view that we will achieve that confidence and there will be rate cuts.”
At the same time, he said the data supported the Fed’s cautious approach to the first rate cut, and added that policymakers are still looking for more evidence that inflation is headed toward their 2% goal. Powell also said it would be appropriate to slow the pace of the Fed’s balance-sheet unwind “fairly soon,” after policymakers held a discussion on their asset portfolio this week.“The decision to slow the pace of runoff does not mean our balance sheet will shrink, but allows us to approach that ultimate level more gradually,” he said. “In particular, slowing the pace of runoff will help ensure a smooth transition, reducing the possibility of money markets experiencing stress.” The Fed’s post-meeting statement was nearly identical to January’s, maintaining the guidance that rate cuts won’t be appropriate until officials have more confidence inflation is moving sustainably toward their 2% target.The Federal Open Market Committee also reiterated its intention to continue reducing its balance sheet by as much as $95 billion per month. Some officials, including Dallas Fed President Lorie Logan, have called for an eventual slowing of the pace at which the Fed is shrinking its portfolio of assets .
BlackMask Blog
Living In LaLa Land
StanChart: Oil Demand Set for All-Time High in May
- StoneX: Ukraine’s recent attacks on Russian refineries could potentially cut ~350K bbl/day of global petroleum supplies and boost U.S. crude prices by $3/bbl.
- Standard Chartered: energy markets kicked off the new year with an overly pessimistic view of oil demand.
- Standard Chartered: global demand will hit a new all-time high of 103.01 mb/d in May.
Crude oil futures have rallied close to a five-month high with concerns about tightening supplies driving up prices in recent days, only coming down to earth on Wednesday and paring some of those gains while awaiting an interest rate signal from the U.S. Federal Reserve. According to StoneX energy analyst Alex Hodes, Ukraine’s recent attacks on Russian refineries could potentially cut ~350K bbl/day of global petroleum supplies and boost U.S. crude prices by $3/bbl. Analysts at J.P. Morgan estimates that 900K barrels of Russian refinery capacity have gone offline after the attacks, adding a risk premium of $4/bbl to oil prices. Brent futures have extended their year-to-date gain to nearly $10 per barrel. That figure is 0.25 mb/d higher than StanChart’s latest forecast, a development that has prompted the analysts to revise their 2024 demand growth forecast to 1.69 mb/d from 1.64 mb/d previously. The analysts have also predicted we are going to see a sustained period of inventory draws in H1-2024, with the cumulative draw during the first half of the year coming in at 185 mb compared with a H1-2023 build of 230 mb. StanChart says demand indications remain robust, and have predicted that global demand will hit a new all-time high of 103.01 mb/d in May, a record which will be broken in June and again in August when demand is expected to clock in at 103.62 mb/d and 104.31 mb/d, respectively. StanChart has predicted that tightening oil markets will continue to power the oil price rally and has reiterated its long-held forecast for Brent to average $94/bbl in Q2-2024.
StanChart has predicted that oil markets will continue to be supply-constrained for the better part of the year. The analysts see limited growth for U.S. crude production, with U.S. supply not likely to move significantly higher than November 2023’s all-time high of 13.319 mb/d. Meanwhile, Russia will continue to struggle to optimize its upstream and downstream oil system, with logistical constraints due to war damage as well as a lack of critical spare parts contributing to a negative outlook for Russian crude and refined products output. More importantly, StanChart sees OPEC+ having ample room to maneuver starting in the third quarter. The analysts have pointed out that a 0.9 mb/d increase in OPEC output in the third quarter would still lead to an inventory draw of 0.5 mb/d for the quarter on top of the 1 mb/d draw across H1-2024. Indeed, OPEC has room to increase Q3 output by as much as 1.5 mb/d Q/Q without increasing inventories. The Energy Information Administration (EIA) is the most bearish of the leading energy agencies; however, using its model, OPEC could increase output by 0.8 mb/d Q/Q without triggering an inventory build. StanChart notes that Q3 crude balances are such that OPEC could significantly increase crude output without depressing prices or negatively affecting inventories.
Israel reportedly orders Al-Shifa hospital evacuation……..Israel claims it seized $3M in Al-Shifa hospital raids
The Israel Defense Forces (IDF) ordered all the civilians currently located at the Al-Shifa Medical Complex in Gaza City to evacuate to avoid going through an air attack, Al Jazeera reported on Thursday. The outlet added that, given the bombing tactics implemented in the hospital and nearby zones, the IDF is seeking to demolish the center completely.Meanwhile, the IDF added it killed more than 140 members of Hamas who were hiding at the hospital. It also claimed it found caches of weapons and different military equipment there.
Israel claims it seized $3M in Al-Shifa hospital raids
The Israeli Defense Forces (IDF) announced on Wednesday that it has confiscated cash amounting to $3 million in United States dollars and Jordanian dinars during their operations at Al-Shifa Hospital in Gaza City.The army mentioned that it had successfully evacuated approximately 3,700 Palestinian civilians from the hospital, who were then transported to southern Gaza. During the operation, a total of 300 suspects were apprehended, including senior Hamas and Islamic Jihad commanders. Earlier reports indicated that Israel has rejected the latest ceasefire proposal put forward by Hamas. Furthermore, a representative from Hamas stated yesterday that the IDF’s raids on the medical facility have disrupted ongoing peace negotiations. NN: Things are heating up. I expect things to get really bloody and then a peace deal will come. You can expect some wild swings in oil.
Israel: 90 Hamas members killed in Al-Shifa Hospital
The Israel Defense Forces (IDF) stated on Wednesday its troops killed about 90 members of Hamas who were allegedly using Al- Hospital in Gaza City as their shelter. “Over the past day, the troops have eliminated terrorists and located weapons in the hospital area, while preventing harm to civilians, patients, medical teams, and medical equipment,” the IDF claimed in its statement. The IDF added that the Military Intelligence Directorate and the Shin Bet interrogated more than 300 people found at the hospital and took more than 160 to Israel for further questioning. Meanwhile, Hamas’s Ismail Haniyeh urged Israel to abandon the hospital, saying its actions are damaging the prospects of a new ceasefire.
U.S. Crude Oil, Gasoline Inventories Continue to Drop
Crude oil inventories in the United States fell this week by 1.519 million barrels for the week ending March 15, according to The American Petroleum Institute (API), after analysts had predicted a 77,000 barrel build. The API reported a large 5.521-million-barrel rise in crude inventories in the week prior. On Tuesday, the Department of Energy (DoE) reported that crude oil inventories in the Strategic Petroleum Reserve (SPR) rose by 0.7 million barrels as of March 8. Inventories are now at 362.3 million barrels.Oil prices were up ahead of the API data release on Tuesday as the market continues to digest and assess Ukraine’s attacks on Russian refineries. Gasoline inventories also fell this week. Gasoline inventories fell 1.574 million barrels, after falling by 3.750 million barrels in the week prior. As of last week, gasoline inventories were about 3% below the five-year average for this time of year, according to the latest EIA data.Distillate inventories rose this week, by 512,000 barrels, after last week’s 1.162 million barrel drop. Distillates were already 7% below the five-year average for the week ending March 8, the latest EIA data shows.Cushing inventories also rose this week, gaining 325,000 barrels after falling by 998,000 barrels in the previous week. NN: The data point are very confusing. Which is why you seeing these kinds of moves.