Crude Holds Firm Despite Bearish Inventory Data As Product Markets Tighten

Most energy contracts are moving modestly higher Wednesday morning after an escalation in the verbal war between the U.S. and Iran seems to have increased the concerns of a shooting war in the near future. The March ULSD contract is the lone dissenter at the moment, unwinding more of the runaway rally it had earlier this week as the North East digs out from a record setting snow pile without the spike in demand we saw a month ago.

Oil prices are shrugging off a huge inventory build estimate from the API, which showed 11.4 million barrels added to U.S. stockpiles last week. The industry group’s weekly report showed draws in product stocks of 1.5 million barrels of gasoline and 2.7 million barrels of diesel. The DOE’s weekly status report is due out at its normal time today.

You can run…U.S. military forces seized the third oil tanker in the Indian Ocean Tuesday, the last ship left that had made a breakaway from the Venezuelan blockade in January. A Bloomberg note overnight highlighted how the crackdown on shadow fleet deliveries is forcing both Russia and Iran to lower their prices even further to find buyers.

The EIA this morning highlighted the steady growth in U.S. LNG exports which are now the largest in the world, just a decade after the first facility came online. Those exports are forecast to continue to grow in the coming years as several new export facilities are completed. Europe has made up the bulk of the LNG purchases over the past 4 years as the continent is still struggling to find replacements for Russian fuel supplies.

Flint Hills reported extended flaring at its 260mb/day Corpus Christi West facility Tuesday, due to an unknown cause. The flaring was said to last 16 hours, but does not appear to have required operating units to shut down.

Calumet’s 60mb/day Shreveport refinery is reportedly dealing with unplanned maintenance issues, with local terminal racks being allocated as a result. No word on the cause or duration of that apparent issue has yet been published.