Daily Energy Report
US air travel, Alhajji OAPEC meeting, US SPR, India pays in roubles, EU methane law, Mideast gasoline premiums, Russia-China-Crypto, Green hydrogen dreams, Columbia royalty deduction, and more.
Chart of the Day: US Air Travel Continues to Rise
Summary
So far this year, the number of US passengers who traveled via air has increased by 6.4% over that of last year and 3.7% of that o 2019. Figure (1) above shows trends in the number of passengers since 2019 and shows that travel has recovered and exceeded pre-COVID levels.
EOA’s Main Takeaways
While the recovery in the number of passengers at US airports is good news for the economy, it is bad news for travelers: high ticket prices, crammed planes, and long lines at airports. US jet fuel demand so far this year is flat YoY and lower than pre-COVID-19 levels by 6.2%! Higher passenger traffic is now being translated into packed planes but no recovery in fuel demand!
Story of the Day
EIA: US SPR Increased by 0.5 mb to 369.3
Summary
Last week, the government added 0.5 mb to the SPR. Now it stands at 369.3 mb as shown in Figure (2) above.
EOA’s Main Takeaways
Since the Biden administration started refilling the SPR, it added 22.5 mb of sour crude. Now the SPR stands at 369.3 mb, of which 225.5 mb are sour crude and 143.8 mb are sweet crude.
As we discussed previously, the Biden administration cancelled the purchases of about 6 mb for August and September when it learned about the Iranian rocket attack on Israel. Now the administration can withdraw oil from the SPR in the summer before the elections if oil prices rise. Our estimate is that the administration will release 30-60 mb if WTI prices reach $90/b. Market fundamentals do not support such prices in the summer, but the breakout geopolitical events do. Now we are watching the buildup of troops on the Egyptian-Gazan borders. The borders on the Gazan side are currently under the control of Israel. There has been cross-border fire since yesterday.
News of the Day
Cheers from Kuwait! Meeting with OAPEC Secretary General
What is OAPEC? https://www.oapecorg.org/Home/About-Us/History
Reuters: India’s Reliance to Buy Russian Oil in Roubles
Economic Times: Reliance Signs Deal with Russia's Rosneft to Purchase Oil in Roubles
Summary