The trade war & real war dilemmas continue to dominate the action in energy prices, with WTI and Brent holding near 3-year highs even while refined products seem to have lost their upward momentum.
When you have the US, Russia, Saudi Arabia & Iran (4 of the 5 largest oil producing countries in the world) dangerously close to armed conflict, it’s not hard to understand why oil prices have hit their highest levels in 3 years this week. One key difference today from the past 3 years is that the excess inventory of oil around the world is no longer there to act as a buffer when these flare-ups in the Middle East happen.
The IEA confirmed that reality in its monthly oil market report, saying it looks like OPEC has accomplished its mission as global oil supplies have pulled back near their 5 year average. The report holds the global demand outlook steady, while noting the uncertainty surrounding the potential trade wars and real wars that are influencing energy prices.
While the war stories continue to take the headlines, the relative cat fight over the RFS has been put on hold for 3 months following Monday’s meeting at the White House. RIN Values have stabilized in the high 30s for ethanol and low 60s for biodiesel as we await the next round of big oil vs big ag.
Charts from the IEA’s monthly report.