- Brent crude hit a fresh seven-year high at $91/Bbl as bullish crude fundamentals outweigh a more hawkish Fed (BBG)
- The recent rally in oil comes as physical supplies appear extremely tight
- Yesterday the Fed supported starting to raise interest rates in March and opened the door to more frequent, potentially larger hikes than expected
- A Geopolitical premium in oil remains as traders keep an eye on events in Ukraine
- Russia has denied plans to invade, but Citigroup estimates that the conflict has added at least $5/Bbl of risk premium
- Gasoline futures are at the highest premium to crude for this time of year since 2013 as refiners struggle to build supply ahead of summer (Bloomberg)
- Nymex gasoline is trading at around $18.50/Bbl above crude
- PADD 3 refiners (U.S. Gulf Coast) are undergoing a heavier-than-usual turnaround season, with many shutting down gasoline units for maintenance
- The supply shortfall is “more than the market can absorb,” says John Auers, executive vice president at Turner Mason