Global oil markets are pulling back as pervasive uncertainty racks the global markets. It is not me saying that but none other than European Central Bank (ECB) President Mario Draghi, who caught the market by surprise with his negative tone, even though the ECB added stimulus by keeping interest rates at subzero levels at least through December instead raising rates in the summer.

Global stock markets plunged on the fact that maybe Super Mario had lost his magic touch by using the force of his will to move markets by whatever it takes. He freaked out markets when he said the European economy was in “a period of continued weakness and pervasive uncertainty.”

Yet oil seemed to be resilient, trying to defy market pessimism because of the strong global demand numbers that keep coming in, and the strong seasonal pattern that we normally see in March. Yet with more data coming in, oil and gas prices fell after weak economic data in China. Not a weakness in Chinese oil demand mind you, where imports of crude continue to stay near record levels above 10 million barrels per day (bpd).  But data that showed China’s February exports plunged by 21 percent from a year earlier, three times the amount expected. That kind of drop would make one think that China was would be desperate to a trade deal, but they may not get one just yet.

The Wall Street Journal reports that a U.S.-China trade deal isn’t imminent.  The U.S. and China have yet to set a date for a summit to resolve their trade dispute, the U.S. ambassador to China said Friday, as neither side feels an agreement is imminent. “A date hasn’t been finalized” for a meeting between President Trump and Chinese leader Xi Jinping, Terry Branstad, the U.S. envoy to Beijing, said in an interview with The Wall Street Journal. He said preparations for such a meeting aren’t yet underway either. Mr. Branstad said, “negotiators need to further narrow the gap in their positions, including on enforcement of an eventual deal, before summit arrangements are made.”

Despite the shakeout, oil and oil products are higher on the week. We are testing the lower end of the channel on the uptrend. If fear takes over, we could go lower yet the fundamentals of the market are still heading towards a tight market. While oil demand may hit a sluggish point at some point, low-interest rates in the U.S. and stimulus in China and now the EU will keep oil demand solid. If we are looking at the low point for the slowdown, because of this stimulus oil demand will outperform. Use the break to put on seasonal trades.

When the lights go out in the city, who would think that if you sat above some of the world’s largest supplies of oil and natural gas, the lights would never go out. No, I am not talking about New York, silly, I am talking about Venezuela. The AP reports that “Much of Venezuela plunged into darkness Thursday evening, creating chaos as people struggled to navigate their way home amid what appeared to be one of the biggest blackouts yet in a country where power failures have become common. The power outage began just as commuters were leaving work. Hundreds crammed the streets of Caracas, forced to walk because subway service was stopped. A snarl of cars jammed the streets amid confusion generated by blackened stoplights. President Nicolas Maduro blasted the outage as an ‘electrical war’ directed by the United States in a statement on Twitter. His information minister, Jorge Rodriguez, said right-wing extremists’ intent on creating pandemonium by leaving the South American nation without power for several days were behind the blackout, but he offered no proof.”

Russia though is helping the U.S. replace Venezuelan crude. OIL PRICE reports that “Russian exports of oil and oil products to the United States surged in the last week of February to their highest level since 2011, with Russia taking advantage of the Venezuelan collapse.” Russian news outlet RBC reports, quoting investment bank Caracas Capital Markets as saying in a note to clients.

At least nine tankers delivered 3.19 million barrels of oil and oil products of Russian origin to U.S. ports in the week February 23 to March 1, according to Caracas Capital Markets, which specializes in Venezuela. These 3.19 million barrels is the largest volume of Russian oil deliveries “we have seen since 2011,” Russ Dallen, Caracas Capital Markets Managing Partner, wrote in the note, as carried by RBC.

Ironically, Russia—the staunchest supporter of Nicolas Maduro’s regime in Venezuela—is benefiting in the U.S. oil market from the U.S. sanctions on Maduro’s government, on the state oil firm PDVSA, and on the Venezuelan oil industry. Meanwhile, Venezuela’s crude oil exports to the U.S. are dropping, “U.S. crude oil imports from Venezuela slumped to just 83,000 bpd in the week to March 1, compared to 208,000 bpd in the previous week, according to EIA’s preliminary data on crude oil imports by top 10 countries of origin, ranked based on 2017 data.“

Big news on natural gas. The EIA reports that between 2014 and 2017 natural gas processing capacity and processing throughput increased by about 5% on a net basis in the Lower 48 states, even as the number of individual plants declined. Natural gas processing plant utilization rates stayed constant at 66% from 2014 to 2017, but several states experienced significant changes, largely reflecting changes in natural gas production across regions. Processing plants are midstream facilities that separate natural gas liquids (NGL) from natural gas. Some natural gas processing plants remove water and other contaminants from the raw natural gas stream and separate NGL streams into component products. As of the end of 2017, 510 active natural gas processing plants were active in the lower 48 states with a total processing capacity of 80.8 billion cubic feet per day (Bcf/d). On average, these plants processed about 53.3 Bcf/d, operating at about 66% of capacity. Plants operate at less than full capacity for many reasons: transportation constraints, varying production volumes and characteristics, and regional economics.

That EIA natural gas in storage was 1,390 Bcf as of Friday, March 1, 2019, according to EIA estimates. This represents a net decrease of 149 Bcf from the previous week. Stocks were 243 Bcf less than last year at this time, and 464 Bcf below the five-year average of 1,854 Bcf. At 1,390 Bcf, the total working gas is within the five-year historical range.

Lots of cheap corn! DTN reports that Ethanol producers in the United States shattered the previous export record by 25% in 2018! Lots of reports today! Jobs! USDA! Grains!