Choppy Holiday Week For Energy Prices So Far

Market TalkWednesday, Sep 8 2021
Pivotal Week For Price Action

It’s a choppy holiday week for energy prices so far as an overnight rally in gasoline and crude oil wiped out Tuesday’s losses. Inventory reports are delayed a day, and are expected to show some huge swings as the industry continues its slow recovery from Hurricane Ida while keeping a wary eye out for the next storm. 

5 of the 9 refineries knocked offline by Ida are in some stage of the restart process this week, but it could be months before some are back fully, and in the case of the Belle Chasse facility, market chatter suggests it may never come back online. The big blow to production is driving a large increase in gasoline imports to the US, with estimates that we’ll see the most deliveries from Europe since the Colonial hack crippled East Coast supplies back in May.

Markets around the world are watching the European Central Bank this week as they debate how to deal with rampant inflation. Record money printing aka stimulus by central banks around the world has pushed stocks in several countries (including the US) to record highs, and there’s more than a little concern as to how the markets will react as those cash infusions come to an end. The correlation between energy and equity markets has weakened in the past few weeks, but the negative relationship with the US Dollar has become more pronounced, making any central bank policy more influential on fuel prices. 

Hurricane Larry continues to churn through the Atlantic, but is staying far enough out to sea to only threaten the US with rough seas. Newfoundland could take a direct hit from this storm, but the Come By Chance refinery that is right in the path and used to be an importer of refined products to the US has been shuttered due to economic reasons for years, so there will not be a supply threat from this storm. There’s another system in the Gulf of Mexico given 50% odds of developing, with projections show it moving east towards Florida but potentially bringing heavy rain to the oil infrastructure still trying to recover from Ida. A third potential system is moving off the African coast, with low odds of development given. We’re just a week away from the peak of the storm season so don’t be surprised to see another storm or two named soon.

A new weight loss strategy? The Financial Times picks up the (renewable) diesel vs donuts debate. 

Click here to download a PDF of today's TACenergy Market Talk.

Market Update 9.8.21

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Pivotal Week For Price Action
Market TalkThursday, Feb 29 2024

It's Another Mixed Start For Energy Futures This Morning After Refined Products Saw Some Heavy Selling Wednesday

It's another mixed start for energy futures this morning after refined products saw some heavy selling Wednesday. Both gasoline and diesel prices dropped 7.5-8.5 cents yesterday despite a rather mundane inventory report. The larger-than-expected build in crude oil inventories (+4.2 million barrels) was the only headline value of note, netting WTI futures a paltry 6-cent per barrel gain on the day.

The energy markets seem to be holding their breath for this morning’s release of the Personal Consumption Expenditures (PCE) data from the Bureau of Economic Analysis (BEA). The price index is the Fed’s preferred inflation monitor and has the potential to impact how the central bank moves forward with interest rates.

Nationwide refinery runs are still below their 5-year average with utilization across all PADDs well below 90%. While PADD 3 production crossed its 5-year average, it’s important to note that measure includes the “Snovid” shutdown of 2021 and throughput is still below the previous two years with utilization at 81%.

We will have to wait until next week to see if the FCC and SRU shutdowns at Flint Hills’ Corpus Christi refinery will have a material impact on the regions refining totals. Detail on the filing can be found on the Texas Commission on Environmental Quality website.

Update: the PCE data shows a decrease in US inflation to 2.4%, increasing the likelihood of a rate cut later this year. Energy futures continue drifting, unfazed.

Click here to download a PDF of today's TACenergy Market Talk, including all charts from the Weekly DOE Report.

Pivotal Week For Price Action
Pivotal Week For Price Action
Market TalkWednesday, Feb 28 2024

It’s Red Across The Board For Energy Prices So Far This Morning With The ‘Big Three’ Contracts All Trading Lower To Start The Day

It’s red across the board for energy prices so far this morning with the ‘big three’ contracts (RBOB, HO, WTI) all trading lower to start the day. Headlines are pointing to the rise in crude oil inventories as the reason for this morning’s pullback, but refined product futures are leading the way lower, each trading down 1% so far, while the crude oil benchmark is only down around .3%.

The American Petroleum Institute published their national inventory figures yesterday afternoon, estimating an 8+ million-barrel build in crude oil inventory across the country. Gasoline and diesel stocks are estimated to have dropped by 3.2 and .5 million barrels last week, respectively. The official report from the Department of Energy is due out at its regular time this morning (9:30 CST).

OPEC’n’friends are rumored to be considering extending their voluntary production cuts into Q2 of this year in an effort to buoy market prices. These output reductions, reaching back to late 2022, are aimed at paring back global supply by about 2.2 million barrels per day and maintaining a price floor. On the flip side, knowledge of the suspended-yet-available production capacity and record US output is keeping a lid on prices.

How long can they keep it up? While the cartel’s de facto leader (Saudi Arabia) may be financially robust enough to sustain itself through reduced output indefinitely, that isn’t the case for other member countries. Late last year Angola announced it will be leaving OPEC, freeing itself to produce and market its oil as it wishes. This marks the fourth membership suspension over the past decade (Indonesia 2016, Qatar 2019, Ecuador 2020).

The spot price for Henry Hub natural gas hit a record low, exchanging hands for an average of $1.50 per MMBtu yesterday. A rise in production over the course of 2023 and above average temperatures this winter have pressured the benchmark to a price not seen in its 27-year history, much to Russia’s chagrin.

Click here to download a PDF of today's TACenergy Market Talk.