US stock draws pushes crude prices higher

Crude prices climbed above 75 $/b at the prompt for ICE Brent futures, as the EIA reported a surprise stock draw of 6.4 mb when most market observers were expecting builds, as there was a possibility that refiners in Louisiana could take longer than expected to ramp-up output. Crude production remained low, at 10.1 mb/d, as the Shell platform bringing 0.3 mb/d of sour crude supply to the coast remained shut. Forward gasoil cracks continued to rally strongly, indicating a recovery in middle-distillate demand, while the rally seemed to shrug off increased diesel supply for 2022, as new refineries are commissioned in the East. 

Today, we released our study on the potential oil-to-gas switching in the power sector due to high natural gas prices. You can consult our analysis here. We struggle to find significant switchable capacity in Europe and Asia. Furthermore, observed price action in Asia shows that fuel oil and natural gas markets remain weakly integrated.

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