Market Comments: Energies are trading mixed this morning.

The dollar traded at a new two-decade high overnight after Putin announced the partial mobilization of the Russian Federation. A partial mobilization is a hazy concept, but it could mean that Russian businesses and citizens must contribute more to the war effort. Putin confirmed that military reservists would be called into active service but insisted that a wider conscription of Russian men of fighting age was not taking place.

The U.S. government does not expect a breakthrough on revising the 2015 Iran nuclear deal at this week's U.N. General Assembly, reducing the prospects of a return of Iranian barrels to the international market.

OPEC+ is now producing below its targets by a record 3.58 million bpd, about 3.5% of global demand, highlighting underlying tight supply in the oil market. Data from OPEC+ showed that the shortfall in August was a record 24% higher than July's 2.89 million bpd.

Wall Street is finally embracing the idea that the Federal Reserve will hike rates into a restrictive territory and stay at that high rate for a substantial period. The Fed will hike and hold, not hike and cut as many in the markets had been forecasting. A September Fed survey shows the average respondent believes the Fed will hike 0.75 percentage points, or 75 basis points, at Wednesday's meeting, bringing the federal funds rate to 3.1%. The central bank is forecast to keep hiking until the rate peaks in March 2023 at 4.26%. Respondents, on average, predict the Fed will remain at the peak rate for nearly 11 months, reflecting a range of views from those who say the Fed will maintain its peak rate for as little as three months to those who say it will hold there for up to two years. The Fed's decision is due today at 1 pm central time.

According to industry sources, European diesel buyers are willing to pay more for Russian cargoes than in May as traders look to get their hands on supplies ahead of a difficult winter and global shortage of fuels. The EU will stop buying all Russian crude oil delivered by sea from early December and will ban Russian refined products two months after that to curb Russia's oil-export revenue.

Oil refiners Valero Energy Corp and Marathon Petroleum Corp are the biggest beneficiaries of the U.S. government's oil reserve releases, taking nearly half the crude offered. Valero, the second-largest U.S. refiner by capacity, secured 52.7 million barrels, while top processor Marathon Petroleum snapped up 45.2 million barrels.

East Coast gasoline inventories in July 2022 were the lowest since October 2014 and remain low due to several factors affecting supply. One significant factor is Russia's invasion of Ukraine, which has disrupted global petroleum product trade and increased competition for fuel supplies in the Atlantic Basin. As a result, less gasoline was imported into the East Coast in 2022 compared with prior years. On average, 24% less motor gasoline was imported into the United States during the first half of 2022 than during the first half of 2021. Another factor affecting supply is decreased petroleum production on the East Coast. The Philadelphia Energy Solutions refinery closed in 2019, and the Come-By-Chance refinery in Newfoundland, Canada, was idled in 2020. Between 2018 and 2021, the capacity to produce petroleum on the East Coast declined by about 400,000 bpd. Although shipments of petroleum products from the U.S. Gulf Coast to the East Coast have been higher than average, further increases are limited by transportation constraints.

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