While You Were Out At Lunch -- Part 1 -- March 11, 2022

For oil bulls: the day-to-day white noise can be distressing, but think about this -- the big picture, except for Russian oil going to China, upwards of seven million bbls of oil has been taken off the global market. 

Russian oil shortfall: it will take five years, could take ten years to "build back better" -- the amount of time needed to replace all ten million bopd Russia is producing. -- Former Texas regulator. Link here.  Charles Kennedy. 

Spare capacity: for those who believe in the tooth fairy, the Easter bunny, and spare capacity, Reuters is very optimistic that OPEC can make up the difference with spare capacity. For the archives. Linked here.

European energy crisis: Norway - Poland natural gas pipeline should be ready in time for next winter. Link here. 

Diesel: this is going to be one of the big energy stories of 2022.

• remember, Saudi just put in an order for multi-million bbls of diesel;
• now this: global diesel shortage raises risk of oil price spike, a repeat of conditions that led to record price in 2008; Reuters.
• pat on my back: I track the weekly EIA report and noticed the distillate fuel issue several weeks ago; pretty cool coming from someone who knew nothing about oil until the blog and input from readers;
• from Reuters:
• in 2008, similar situation helped propel oil prices to a record high;
• US: inventories are 21% below the pre-pandemic five-year average, and lowest level since 2005
• Europe: inventories are 8% below ... and lowest level since 2008;
• Singapore: inventories are 32% below ... and also lowest since 2008
• first question I would ask: why is Europe a relative outlier; this tells me the German economy is struggling;

Diesel, cont'd: loss of Russian crude will force European refiners to cut diesel output.

• reduction in output would coincide with tight diesel market
• Europe will need to pull crude supplies form further afield
• one-third of UK diesel imports come from Russia; no others come close