Energy Rally Stalls as US Stocks Slip and Ukraine De-Escalation Hints Spur Seller Return

The recovery rally in energy contracts ran out of steam Tuesday as US stock markets pulled back after a 2 day rally, and small signs of progress towards less violence in Ukraine both seemed to encourage sellers to return after a short hiatus.

While a temporary general ceasefire was not agreed to in Tuesday’s widely publicized phone call between the President’s of Russia and the US, the sides did agree to a 30 day pause in attacks on energy infrastructure. The progress appears to be short-lived however as both sides have already accused the other of violating that agreement just a few hours after it was made. While any pause in the relentless attacks on refineries on both sides of the front lines certainly won’t hurt supplies, the bigger impact on global markets would come from any relaxing of Russian sanctions that would allow their exports to be sold to more countries and ease shipping bottlenecks.

The FED’s latest open market committee announcement is scheduled today for 1pm central, and just about nobody thinks the FOMC will announce a shift in interest rates. The CME’s Fedwatch tool shows a 99% probability that rates will be held at least until the May meeting as the chairman has made it clear they’re in no rush to make any policy changes.

The API estimated declines in refined product inventories last week with gasoline stocks down 1.7 million barrels and diesel stocks down 2.1 million barrels for the week. The industry group estimated a build in total US crude inventories of 4.6 million barrels while Cushing stocks dropped by 1.1 million. The EIA’s weekly status report is due out at its normal time this morning.

Member’s of the API’s executive committee, representing the largest oil producers and refiners in the world are scheduled to meet at the White House today where they will no doubt try to explain why neither “Drill Baby Drill” nor tariffs on our neighbors make any sense.