Fresh Highs As Near-Term Alternatives To Russian Crude Remain Limited

WTI is +$3.20 and Brent is +$3.60 at typing, backing away from best levels after registering fresh cycle highs for a third consecutive day during early Asia dealing. Both benchmarks remain strongly bid, with the well-documented lack of demand for Russian energy exports set to further hamper wider global crude supply in ’22 (Russian crude export volumes are estimated to be ~5mn bpd) pushing the price of the major benchmarks higher (while Russian crude trades at an ever widening discount).

• Spot and front month prices for Brent and Middle Eastern grades of crude continue to rise against longer dated contracts, with deepening backwardation evident on the aforementioned shunning of Russian supply.
• EIA data released on Wednesday pointed to a decline in U.S. crude inventories (compared to Platts median estimates calling for an increase, although Tuesday’s API inventory estimates reportedly revealed a sharper drawdown than the EIA reading) while there were smaller than expected declines in gasoline and distillate stocks. Crude stocks at the Cushing hub declined as well, reaching levels not witnessed since Sep ’18.