Energy Futures Higher To Start The Day With ULSD Leading The Way

Market TalkFriday, Jul 21 2023
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Energy futures are green across the board so far this morning with ULSD leading the way higher with +2% gains. Gasoline, WTI and Brent crude oil futures are trailing behind, each drifting higher by about 1% to start the last trading session of the week.

If WTI can stay above the $75 dollar mark today, this will be the fourth consecutive week the American crude oil benchmark has risen. While weaker-than-expected Chinese economic data initially spurred the week’s rally, it's expected Beijing will step in with stimulus programs to get things going again, post its COVID lockdown policy. The tightening of Russian and Saudi crude oil exports is what the buyers are citing today as the reason to finish the week higher.

The Wall Street Journal published an interesting article highlighting the prominence of Corpus Christi Bay when it comes to oil exports. Being the closest deep-draft port to the Permian Basin makes Corpus the dominant hub for exporting U.S. produced crude oil, but the pipelines supplying the Bay are nearing capacity. While some companies like Enbridge are focusing on infrastructure expansion, the City of Corpus Christi is attempting to future-proof its energy export economy, applying for grants aimed at hydrogen energy research.

Our fledgling disturbance in the Atlantic Ocean is now given a 40% chance of development over the next week as it heads westward towards the Lesser Antilles. While this year’s El Nino was anticipated to keep a lid on cyclonic development, the extremely warm water in the Atlantic may override the effects of strong vertical wind shear. We will keep you posted on El Nino vs Hot Tub as the season progresses.

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Market Talk Update 07-21-23

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Market TalkFriday, Sep 29 2023

The Energy Bulls Are On The Run This Morning, Lead By Heating And Crude Oil Futures

The energy bulls are on the run this morning, lead by heating and crude oil futures. The November HO contract is trading ~7.5 cents per gallon (2.3%) higher while WTI is bumped $1.24 per barrel (1.3%) so far in pre-market trading. Their gasoline counterpart is rallying in sympathy with .3% gains to start the day.

The October contracts for both RBOB and HO expire today, and while trading action looks to be pretty tame so far, it isn’t a rare occurrence to see some big price swings on expiring contracts as traders look to close their positions. It should be noted that the only physical market pricing still pricing their product off of October futures, while the rest of the nation already switched to the November contract over the last week or so.

We’ve now got two named storms in the Atlantic, Philippe and Rina, but both aren’t expected to develop into major storms. While most models show both storms staying out to sea, the European model for weather forecasting shows there is a possibility that Philippe gets close enough to the Northeast to bring rain to the area, but not much else.

The term “$100 oil” is starting to pop up in headlines more and more mostly because WTI settled above the $90 level back on Tuesday, but partially because it’s a nice round number that’s easy to yell in debates or hear about from your father-in-law on the golf course. While the prospect of sustained high energy prices could be harmful to the economy, its important to note that the current short supply environment is voluntary. The spigot could be turned back on at any point, which could topple oil prices in short order.

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

Pivotal Week For Price Action
Market TalkThursday, Sep 28 2023

Gasoline And Crude Oil Futures Are All Trading Between .5% And .8% Lower To Start The Day

The energy complex is sagging this morning with the exception of the distillate benchmark as the prompt month trading higher by about a penny. Gasoline and crude oil futures are all trading between .5% and .8% lower to start the day, pulling back after WTI traded above $95 briefly in the overnight session.

There isn’t much in the way of news this morning with most still citing the expectation for tight global supply, inflation and interest rates, and production cuts by OPEC+.

As reported by the Department of Energy yesterday, refinery runs dropped in all PADDs, except for PADD 3, as we plug along into the fall turnaround season. Crude oil inventories drew down last week, despite lower runs and exports, and increased imports, likely due to the crude oil “adjustment” the EIA uses to reconcile any missing barrels from their calculated estimates.

Diesel remains tight in the US, particularly in PADD 5 (West Coast + Nevada, Arizona) but stockpiles are climbing back towards their 5-year seasonal range. It unsurprising to see a spike in ULSD imports to the region since both Los Angeles and San Francisco spot markets are trading at 50+ cent premiums to the NYMEX. We’ve yet to see such relief on the gasoline side of the barrel, and we likely won’t until the market switches to a higher RVP.

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