Market Pulse
U.S. crude oil inventories increased by 3.8 million barrels for the week ending March 6, bringing commercial stockpiles to 443.1 million barrels, according to the U.S. Energy Information Administration (EIA). Despite the build, inventories remain about 2% below the five-year average for this time of year. The report contrasts with data from the American Petroleum Institute, which estimated a 1.7 millionbarrel draw the previous day. Oil prices rose Wednesday amid continued disruptions to tanker traffic through the Strait of Hormuz and escalating tensions with Iran; by 9:19 a.m. in New York, Brent crude traded at $90.63 per barrel (+3.35% on the day) while WTI reached $86.10 per barrel (+3.18%). Meanwhile, gasoline inventories fell by 3.7 million barrels on strong demand, with production averaging 9.9 million barrels per day. Distillate stocks declined by 1.3 million barrels as production rose to 4.9 million barrels per day. Over the past four weeks, total U.S. petroleum products supplied—a proxy for demand—averaged 21.0 million barrels per day, up 1.9% year over year, with gasoline demand averaging 8.8 million barrels per day and distillate demand averaging 4.1 million barrels per day. The crude build was largely driven by slightly lower exports, while draws in gasoline, diesel, and propane reflected strong demand; however, inventories could return to builds next week if demand moderates.
Fundamentals
EIA’s Weekly Petroleum Inventory in MM’s BBLS
| Commodity | US Inventory | Change | 3 Yr Ave | CURRENT MARKETS |
|---|---|---|---|---|
| Crude Oil | 443.1 | 3.8 | 454 | WTI Crude: 4.57 |
| Gasoline | 249.1 | -3.7 | 237 | Heating Oil: 0.3307 |
| Distallates | 119.4 | -1.3 | 118 | RBOB: 0.1414 |
| Commodity | US Inventory | Change | Midwest Invent | Change |
|---|---|---|---|---|
| Propane | 71.7 | -1.7 | 13.8 | -0.1 |
Propane
Propane hub values have struggled to keep pace with broader energy markets, despite a recent ten-cent increase over the past two weeks. While crude prices have risen approximately 35%, propane hubs have posted more modest gains of 15–18%. Although a convergence between propane and crude prices remains possible, market dynamics continue to create a divergence.
Disruptions in transport through the Strait of Hormuz have significantly impacted LPG shipments, with an estimated 14–15 million barrels currently in limbo in the Gulf. Limited storage capacity in the Middle East has prompted reductions in output from oil and LNG wells, which is expected to further constrain regional LPG production.
Currently, Conway propane is valued at approximately 31% of WTI crude, while Mt. Belvieu remains well below its typical seasonal average of around 50% for this period.
Iran War
- France says its naval vessels en route to the Persian Gulf will take several weeks to begin escort operations in the Strait of Hormuz.
- Three vessels transiting the strait were struck this morning in suspected drone attacks; one ship was evacuated after a fire, while two others sustained minor damage.
- Concerns are growing that Iran may have begun laying naval mines, potentially using small fishing vessels or commercial ships to deploy them covertly.
- Once mines are deployed, retrieval is extremely difficult, and affected waters are typically deemed unsafe until extensive mine-clearing operations occur.
- President Donald Trump has called on Iran to retrieve any mines that may have been placed in the waterway.
- Iran may restrict the already narrow transit corridor through the strait while maintaining passage for vessels associated with its “shadow fleet.”
- An Iranian military spokesperson warned that oil prices could reach $200 per barrel.
- The International Energy Agency (IEA) is coordinating a potential release of up to 400 million barrels from strategic petroleum reserves to help stabilize global energy markets.
Quote
“In the midst of chaos, there is also opportunity.”
-Sun Tzu
Disclaimer: The data, information and related graphics (collectively, “Information”) is for general information use only and is compiled from sources believed to be reliable. Dale Petroleum Company does not guarantee its accuracy or completeness, nor does DPC assume any liability for any inaccurate or incomplete information. The Information is not intended to be a research report nor an analysis of a company and it should not be relied upon for making investment decisions. The information is subject to change without notice, is for general information only and is not intended as any offer or solicitation with respect to the purchase or sale of any financial instrument or as personal investment advice.