Ukraine/Russia War: Earlier this week, representatives of the United States and Ukraine developed a ceasefire agreement proposal that would last for 30-days between Ukraine and Russia. The same agreement was proposed to Russia, however, the Russian government raised concerns about the agreement. Suggestions by Vladimir Putin take the ceasefire agreement's proposal indicate the leader is skeptical that the agreement wouldn't just be respite for Ukraine to continue fighting the war. 

IEA Demand Outlook: The International Energy Agency revised global oil demand forecasts by 100k bbl per day compared to last month. IEA expects global oil demand is exceeded by supply approximately 600k bpd. The United States has been producing at record high levels and is forecasted to lead supply growth in 2025. Approximately 60% of oil demand growth (1.03 million bpd) is expected in the Asia market according to IEA.   

U.S. Inventory Data: Inventories for petroleum products showed mixed moved with a notably large draw on gasoline stocks. Gasoline inventories fell 5.7 million bbl during the week last week - more than double the expectations of 1.9 million. Distillate stocks drew down slightly while crude inventories showed builds. The draw on gasoline gives hope for the seasonal gasoline demand through spring, however, analysts expressed concerns about the economic impact of tariff wars for the second half of the season. 

Market Overview: With both supportive and softening headlines, petroleum futures are showing minimal changes this morning. Optimism about regional conflicts ending, potentially allowing Russian energy products back to market, seems to be waning after comments released by the Kremlin. Product inventories are significant, especially in the mid-continent. Coupled with expectations of waning demand during 2025, bearish sentiment is offsetting support. 

PADD2 HO Inventory (EIA)

PADD2 heating oil inventories are well above the 5-year range high by approximately 2.2 million bbls for this time of year. While domestic inventories appear much more "normal" the massive inventory in PADD2 is offset by some of the other districts that are running lower than their 5-year range. Ample supply has given some opportunity in recent past regarding cash prices, but with refinery maintenance in PADD2 beginning at the end of the month, bringing a lot of capacity offline, inventories could sharply fall as we head into the spring agriculture season and support regional prices.

Oil prices fell over 1% during the session today. Markets weighed economic concerns, which included the risk that a tariff war between large global economies will damage global demand. The Trump administration threatened additional tariffs of up to 200% on some imports from Europe. Additional downward pressure came from the U.S. proposal for a cease fire between Russia and Ukraine, which the Kremlin has indicated needs reworking. Earlier reporting indicated that oil supply would outpace demand by approximately 600k bpd in 2025 adding further downward pressure to energy contracts. Stock indexes also fell during the session to levels below the run up after election day in the United States, contributing to pulling energy contracts lower.