Tropical Storm Sara Dissipated As It Moved Over Land This Weekend

Energy markets are ticking modestly higher to start the week, after a soft finish Friday, with a notable escalation in the growing war in and around Ukraine and a new ship attack in the Red Sea both contributing to the bullish feel early on.

Money managers showed they continue to struggle to try and time energy contracts, selling off a large portion of the length they’d added in the week prior. The exception to that rule came from the European (ULSD equivalent) Gasoil contract which continued to add new long positions after the big increase a week ago. A combination of factors may be encouraging speculators that European diesel prices will rise in the next few months including Chinese exporters reducing shipments due to reduced tax incentives, a reduction in bio-fuel production, Russia cutting off Austria’s natural gas supplies, and colder temperatures forecast after 2 warm winters that bailed the continent out from another energy crisis. Then again, if large funds were really bullish on diesel prices, their overall position wouldn’t still be a net short.

Baker Hughes reported the US Oil rig and Natural Gas rig counts dropped by 1 rig each last week.

Tropical Storm Sara dissipated as it moved over land this weekend, but its remnants are still expected to bring heavy rain to parts of the US Gulf Coast from Louisiana to Florida over the next few days. The wind forecast for this storm is down notably from last week thanks to the lack of structure, which means it should be a relative non-event for oil production and refining assets along the Gulf Coast.

Today’s interesting read from the BBC on the challenges faced by the new Dangote refinery.