- West Texas Intermediate is poised for a small gain on the week following tightening Cushing stocks and high global energy prices
- This week the EIA reported another large pull on Cushing inventories, showing that stockpiles declined more than 4 MMBbl over the past two weeks to 31 MMbl
- The storage tanks in Cushing, Oklahoma, require a minimum level of oil to maintain normal operations, which traders believe is around 20 MMBbl (Bloomberg)
- Pricy natural gas is threatening to reduce profit for some oil refiners, forcing them to cut processing rates and alter crude-buying patterns (Bloomberg)
- Methane is essential to making hydrogen that oil refiners rely on for diesel-producing machines called hydrocrackers and hydrotreaters
- The hike might, in theory, make some refinery operations unprofitable, the IEA said
- Physical oil traders say the natural gas surge is affecting which grades refineries prefer and that some hydrocrackers in Europe may have to cut how they process
- AEGIS notes that high natural gas prices have become a double-edged sword as gains in gas-to-oil switching in the power sector can be partially offset by demand destruction in other oil-dependent industries