Break the record again! Energy crisis approaching? US refined oil prices start soaring mode!

WTI crude oil futures overtook Brent
.

In the context of OPEC+ "squeeze toothpaste" production increase by the oil-producing countries organization, the impact of the situation in Ukraine on Russia's energy exports continues to impact the global oil market
.
Now European countries are preparing to find alternative supplies, further intensifying competition for global fuel supplies in a low-inventory environment
.
With the U.
S.
summer driving season approaching, gasoline prices across the U.
S.
hit record highs this week, and WTI crude oil futures prices also outpaced international benchmark Brent crude oil
.

Tamas Varga, senior market analyst at crude oil broker PVM Oil Associates, said in an interview with the first financial reporter that the impact of geopolitical factors continues to be released, pushing up commodity markets
such as energy.
The problem boils down to the fact that substitution of Russian products is clearly difficult to solve
quickly.
As the main factor driving up inflation, the current efforts of the US government to control oil prices are obviously far from enough
.

The U.
S.
consumption boom is coming

The situation in Ukraine is exacerbating the strain
on global energy supplies.
OPEC+ crude oil production fell to a six-month low of 41.
58 million b/d in April, with Russian production down 900,000 b/d
, as Russian crude exports hit by Western sanctions, S&P Global Platts survey found.
According to estimates by the International Energy Agency (IEA), if the EU ban on Russian crude oil is passed soon, up to 3 million barrels per day of Russian production capacity will be affected
in July.

To balance market supply, the Biden administration announced in March the release of up to 180 million barrels of oil
from the Strategic Petroleum Reserve (SPR) over a six-month period.
The latest data show that SPR inventories are now at their lowest
level since the week of 4 May 2001.
At the same time, domestic refined oil inventories in the United States have gradually declined
with the increase in exports.
U.
S.
distillate inventories fell 9.
4 million barrels, or 8 percent month-on-month, and total inventories were 23 percent
below the five-year average, according to the U.
S.
Energy Information Administration (EIA).

This week, U.
S.
refined oil prices began to soar mode
.
On May 18, local time, the average gasoline price in the United States once again set a record record, reaching $4.
57 per gallon, of which the average price in California, Washington, Nevada and Hawaii has exceeded $
5 per gallon.

As the U.
S.
summer travel season begins, a new wave of energy consumption is adding to market anxiety
.
According to the latest forecast from the American Automobile Association (AAA), 39.
2 million visitors are expected to travel by road or air this year, an increase of 8.
3%,
compared with last year.
Paula Twidale, senior vice president of AAA travel, said: "Memorial Day (May 30) is a good predictor
.
Based on our observations, summer travel demand is heating up this year and is likely to get
hotter and hotter.
”

Varga analyzed to reporters that factors such as the fall in US crude oil inventories and the unsolved alarm of the European energy crisis are becoming important risks
in the short-term market.
Driven by strong demand expectations, the discount range between WTI crude oil futures contracts has widened again, exacerbating the risk of
further growth of refined oil.
He predicted that with the arrival of the summer consumption peak, US gasoline consumption is likely to challenge the single-day consumption record
of 10.
043 million barrels set in 2021.

While the demand side returns, the supply side capacity is still tight
.
The EIA's short-term energy outlook this month forecasts U.
S.
crude production this year at 11.
91 million b/d, down 200,000 b
/d from its April estimate.

JPMorgan commodity strategist Natasha Kaneva warned that retail gasoline prices across the country could reach $6.
20 a gallon in August
.
U.
S.
gasoline inventories have seen a seasonal decline since mid-April as refineries focus on increasing diesel production and are now at their lowest seasonal level
since 2019.
Gasoline inventories on the East Coast tightened even tighter, falling to their lowest level
since 2011.
He believes U.
S.
consumers won't see a significant pullback
in gasoline prices until the end of the year unless refiners shift their production focus to gasoline and cut exports immediately before the start of the driving season to rebuild inventories.

Energy crisis approaching?

Since May, US President Joe Biden has repeatedly said that the new crown epidemic and the Russia-Ukraine conflict are the two main reasons for the current high inflation in the United States, and he has called the price issue the number one challenge
for American families.
"I take inflation very seriously, which is a priority
for the federal government.
" He said
.
The U.
S.
consumer price index (CPI) rose 8.
3 percent in April, still at its highest level since 1982
, according to the Commerce Department.
Among them, energy prices increased by 30.
3% year-on-year, which was the main driver of price increases
.
Varga believes that from Biden's statement, the Democratic Party has realized that reducing the cost of living is the key to
defending congressional control in the midterm elections.

The energy price transmission effect continues to spread
.
Industry data showed that trucking prices rose by 4.
4% in April, further pushing up end-commodity price pressures
.
A survey released last week by the University of Michigan showed that the U.
S.
consumer confidence index fell to its lowest level since August 2011 in early May, and persistent concerns about inflation affected the American public's view
of the economy.

Tim Stuart, president of the American Oil and Gas Association, believes that the United States is experiencing its worst energy crisis in 50 years, but the authorities are not doing the necessary steps to solve the problem
.
He said transportation issues could lead to further supply chain problems and higher
inflation.
This problem arises in large part because of the growth of US oil exports to the European market and the restriction of imports of
Russian oil products due to political considerations.

Varga told reporters that the trouble now is that refining capacity cannot fill the gap
caused by sanctions.
With the recent rise in gasoline and diesel prices, U.
S.
refineries began to gradually reduce oil products such as heating oil, but it is still difficult to meet market demand, and gasoline cracking spreads have reached a historical peak
of nearly $56 this week.
He expects tight oil supplies to put further upside risks to market prices while remaining more resilient
.

With the OECD and global inventories currently at low levels, the supply and demand situation in the oil market will deteriorate
further if the EU adopts the proposed comprehensive oil embargo on Russia, or if Russia takes punitive measures due to NATO's planned expansion.
The United States turned its attention to South America, Venezuelan Vice President Rodriguez posted on social media on the 17th that the news that the US government has allowed the United States and European oil companies to restart business in Venezuela is true, hoping that the decision will open the way
for lifting unilateral economic sanctions against Venezuela.

According to media reports from all parties, the US government will allow the US Chevron Oil Company and Venezuela to negotiate future business activities in Venezuela, but Chevron is still not allowed to carry out upstream drilling activities in Venezuela and sell Venezuelan crude oil
.
At the same time, the United States will also allow European oil companies with operations in Venezuela to export Venezuelan oil
to Europe.