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Wholesale Gasoline Prices Have Dropped To Their Lowest Levels Since Last Christmas
Wholesale gasoline prices have dropped to their lowest levels since last Christmas, after 3 weeks of selling that will give consumers across most of the country something to be thankful for this week. Crude oil and diesel prices have also come under pressure and are currently holding near technical support levels that look pivotal for price action for the remainder of the year.
One unusual note about this selloff: WTI has slipped into a slight contango with the December contract trading roughly 20 cents less than January, a phenomenon we haven’t seen in over a year. That shift in the price curve follows reports that European refiners are actually oversupplied with crude oil, as traders have done too good of a job preparing for the upcoming embargo on Russian imports. Now that crude oil inventories are filling up ahead of their December deadline, the question is if the same feat can be accomplished for diesel before that ban hits in February.
Right on cue, Kuwait’s new 600mb/day refinery, the largest in the Middle East, continues to slowly bring units online, and reportedly sold its first distillate cargo into the export market this week. While the new refining capacity is certainly welcomed in a world starving for diesel fuel, the challenge will be finding enough cargoes to get that fuel where it needs to go, and tanker rates that are surging as a result.
Meanwhile, while many headlines focused on Qatar not serving beer at the world cup, the country was closing on the longest supply deal in history to supply China with LNG for 27 years. Long term deals are critical in the LNG market that requires billion dollar facilities to be able to freeze the gas before it can be loaded on ships, and as part of the reason the world is essentially “sold out” on new LNG for the next 3-4 years.
Money managers reduced their length in petroleum contracts last week with a combination of new short positions and liquidated longs both contributing to the drop. The total positions held, and the open interest in all contracts continues to suggest there’s plenty of money that’s not playing in the energy arena these days, and whether or not it ever comes back may have a large impact on how prices behave in the coming year.
Baker Hughes reported a net increase of 1 oil rig and 2 natural gas rigs drilling in the US last week. The total of 623 oil rigs is the highest since the pandemic shutdown started in March 2023, but is still 60 rigs lower than pre-COVID levels.
The Energy Complex Is Seeing A Third Straight Day Of Heavy Selling To Start Friday’s Session
The energy complex is seeing a third straight day of heavy selling to start Friday’s session, with WTI once again dropping below $80/barrel and gasoline prices across large parts of the US approaching their lowest levels of the year. ULSD has also given up its relative strength temporarily as time, crack and basis spreads have all come under heavy selling pressure this week, and outright prices dropping below $3.50, which sets up a potential test of the $3.10 range in the coming weeks.
On November 8th, prompt ULSD in New York cost $4.97/gallon, and today will go for around $3.70 as the best cure for high prices is high prices motto played out once again and resupply options from around the world are starting to reach the harbor. It’s worth noting that despite the big drop in New York values, the price to buy space on Colonial’s diesel line, or the other smaller lines moving product North and West, have continued to move higher as it looks like the Gulf Coast will be long distillates for some time as transportation options struggle to keep up with production.
The West Coast has seen a similar phenomenon with gasoline prices over the past 10 days, with LA and San Francisco CARBOB values dropping roughly $1/gallon in the past 10 days after a refinery fire turned out to be a non-event, and run rates in the region have moved to above average levels in the past few weeks.
The forward curve charts below show that the selling in refined products over the past month has been fairly steady across the next 3 years, reinforcing the idea that this pullback has to do with concerns about consumption, rather than an easing of the tight supply situation. Crude oil on the other hand has actually seen values in the outer months tick higher while more current prices have dropped, which could be a sign that refiners may be selling forward cracks (short products/long crude) to lock in values that are historically very high, even if they’re not record setting like we’ve seen this year.
The scramble continues to save an Italian oil refinery that will be forced to close once Europe’s oil embargo on Russian crude takes effect in a few weeks. That refinery has become a microcosm for global energy supplies as Europe desperately needs all the distillate output from the facility, while the plant has also become a notable “loophole” to get Russian oil to the US.
Click here to download a PDF of today's TACenergy Market Talk.
Energy Futures Are Bouncing This Morning After Heating And Crude Oil Futures Carved Out Fresh Multi-Month Lows
Energy futures are bouncing this morning after heating and crude oil futures carved out fresh multi-month lows. The prompt month distillate contract is leading the way higher this morning, trading up over a dime to start the day.
Gasoline prices are exchanging hands 4 ½ cents higher than they settled yesterday. WTI futures are up over $1 per barrel.
Hurricane Ian is dominating both national and industry-specific headlines as it makes landfall in Cuba this morning. Localized flooding, high winds, and a sizeable storm surge are the main concerns of the residents in its path, namely the densely populated Tampa Bay area.
As of now, oil production platform closures and the temporary shuttering of refined product terminals along the storm’s path are the only impacts Ian has had on energy infrastructure.
But prices just came down? There are increasing calls from market participants (investment banks) for OPEC’n’friends to cut back supply in an effort to put a floor under oil prices.
KTBS 3 Spotlight on TACenergy Leadership COO Fred Sloan - Sharing Thoughts on Changes in the Gas Market
Oil and Gas Prices Impacted by Tensions Oversees
Feb. 25, 2022
By JULIE PARR, KTBS TV
CLICK HERE to view read the original story on KTBS.com>
DALLAS, Texas - A Texas-based fuel supplier says gas prices will likely go up some more before they go down.
TAC Energy CEO Fred Sloan says crude oil prices have been going up over the past year. He says prices are about 35% higher than they were a year ago.
While the war in Ukraine has created some uncertainties in the energy market, Sloan says oil and gas supplies are not an issue for the U.S., and he doesn't believe gas prices will go up dramatically.
"The U.S. market is super elastic, and the U.S. crude supply is not at risk, refinery operations are not at risk, and the fuel that is at the gas station down the street will be there," said Sloan.
He says gas prices are expected to slightly increase in the spring and summer as usual, but as long as there's no major escalations in Europe, prices should slowly decrease of the course of the year.
"Now again, it will be volatile for a while, but the fact of the matter is there is no major supply demand influence that's going to cause prices in our region to get above where we are today," said Sloan.
Meanwhile, Sloan says the Ukraine invasion could have more of an impact on the global grain supply.
Russia and Ukraine together produce nearly a quarter of the world’s wheat.
TAC Creates Hangar Management Business with Acquisition
by Jerry Siebenmark / May 18, 2021, 6:01 PM
TAC Private Hangars will manage 60,000 sq ft of hangar space and 5,000 sq ft of office space at Scottsdale Airport in Arizona following parent company The Arnold Companies' acquisition of the assets of Gemini Air Group.
Following its May 1 acquisition of the assets of Gemini Air Group at Arizona's Scottsdale Airport (KSDL), Arizona, Dallas-based The Arnold Companies (TAC) has established a Keystone Aviation operation there. Additionally, it created TAC Private Hangars, which will manage more than 65,000 sq ft of upscale private hangar and office space at KSDL.
Keystone, which was acquired by TAC in 2012, will provide its full range of charter, aircraft management, and Part 145 repair station services at SDL that will serve as a second hub to Keystone’s primary hub at Salt Lake City International Airport. The Keystone charter fleet comprises 13 business aircraft and includes Pilatus PC-12 turboprop singles, an Embraer Phenom 100, and a Gulfstream G550.
“Picking up a second hub in Scottsdale expands our regional footprint south from Salt Lake City in the desert to mountain corridors we fly regularly,” said Keystone COO Aaron Fish. “With the addition of Scottsdale, we can now offer a greater selection of aircraft to get customers where they want, when they want.”
Meanwhile, "the brand extension under TAC is a strategic opportunity for development as we continue to diversify our services and expand into new [business aviation] markets," said TAC Private Hangars COO Joe Gibney. In addition to providing customers with hangar space and tenant office space, TAC Private Hangars will offer dedicated handling services at KSDL.