Vladimir Putin brimming with pride announced that he signed a treaty and approved Crimea’s vote to join the Russian Federation and promised really hard that he would not invade any other countries and tells Parliament he does not want more of Ukraine. He is happy with the part he stole I guess. While the market seemed to rejoice, reports of shots fired and rising violence may signal that things might not be so easy for after all.
Pro-Russian forces in Crimea broke down a fence surrounding Ukraine's navy headquarters in the Black Sea port of Sevastopol and stormed onto the premises to raise a Russian flag, Interfax and the Associated Press reported on Wednesday. No violence was reported as the head of the Russian Black Sea fleet entered the building to meet with his Ukrainian counterpart. The report comes a day after the first killing of a Ukrainian soldier in Simferopol, the capital of Crimea. Well-armed commandos in Russian uniforms stormed a Ukrainian base in the city on Tuesday night after Russia signed a treaty to annex Crimea. The incident raised doubts about how peaceful the annexation process would be. A Kremlin spokesman called it provocation.
We also know that it is not going to be easy for this economy. The Russian economy, already nothing to brag about, could sink into a deep recession while Putin pops champagne. The Russian stock market has already fallen close to 20% and if President Obama was smart he would start trying to freeze Russian bank accounts, not allow them access to the banking system.
Oil tried to look beyond the crisis but headlines show the tension put some of the risk premium back in. We saw a rally in wheat and gold came off the lows. Petroleum got a preview of inventory with an American Petroleum Institute surprise. The API reported that crude oil stocks increased by 5.9 million barrels. It seems that even with a slight uptick in refinery runs supply were overwhelming. It seems that those surprise early year draws are correcting themselves. Congestion in Houston and bad weather has played havoc with the Gulf Coast. We could see an all-time record supply in today’s report easing concerns that we saw a seasonal drop of 1.4 million barrels of gasoline and 674,000 barrel drop in distillate.
Cushing supply fell but word that Seaway is ahead of schedule means there may be more draws soon. Bloomberg reported that “Enterprise Products Partners LP (EPD:US) plans to start its Seaway pipeline expansion as early as May, more than doubling the system’s capacity to move oil from the delivery point for West Texas Intermediate futures in Cushing, Oklahoma. Enterprise is looping the existing Seaway line with a parallel pipe that will increase capacity to the Houston area to 850,000 barrels a day. The twinned line is expected to be in service in late May or early June, Bill Ordemann, a senior vice president for Enterprise, said in a presentation to analysts in Houston. The company, which operates the line and co-owns it with Enbridge Inc., previously said it would start late in the second quarter. Enterprise and Enbridge reversed Seaway in May 2012 and expanded it to the current capacity of 400,000 barrels a day in January 2013.”
Big Ships Play Texas Chicken in Congested Houston Channel
“We’re coming down the home stretch,” Ordemann said. “We’ll continue to bring on the loop line here probably in late May, early June.”
Enterprise has been loading ocean-going barges and larger vessels with crude coming off Seaway at Freeport, Texas, Ordemann said. It expects to start loading from Texas City, Texas, on a temporary basis this summer and permanently next year.
The company dedicates about 90% of the space on Seaway to committed shippers and the rest to uncommitted customers who ask for capacity month by month. In some months this year, no uncommitted shippers have asked for room, Ordemann said.
Fed Meeting Today! All about the Guidance!