Energy Futures Look Like They’re Stuck

Market TalkTuesday, May 21 2019
Gasoline And Diesel Contracts Trying To Lead Energy Complex Higher

Energy futures look like they’re stuck roughly half-way between their April highs and May lows, waiting for the next headline about China or Iran before making their next move. The choppy action has wiped out any technical momentum, making any sort of trend appear unlikely until we break out of this range in one direction or another.

Stock markets around the world are pointing higher after it appears the US eased some trade restrictions with Huwawei, allowing time for a trade deal to be negotiated.

Another drone attack was reported in Saudi Arabia, but seems to have been quickly dismissed as part of the long-running war in Yemen, rather than an escalation in violence that was threatening oil infrastructure last week. Speaking of which, with details remaining scarce on either of last week’s attacks that helped energy prices pull back from the brink of a major sell-off, doubts are creeping in about what really is happening, and whether or not Iran is involved.

We’re still 10 days away from the official start of the Atlantic hurricane season but just as we’ve seen in the past several years, we have an early storm as Andrea was named Monday near Bermuda. This subtropical storm is not a threat to the US, but it’s a reminder that it’s time to dust off those Hurricane preparedness plans.

Much closer to home a tornado outbreak is currently taking place across a swath of TX, OK and KS. There are a handful of refineries in the path of those storms, most of which feed the Group 3 market. No word yet on if there are any disruptions, but given the location and relatively small size, it’s unlikely we’ll see an impact on product futures if there is any damage to those plants, while WTI could be influenced if there are any impacts to the Cushing OK storage hub.

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Pivotal Week For Price Action
Pivotal Week For Price Action
Market TalkWednesday, Mar 27 2024

Most Energy Contracts Are Ticking Lower For A 2nd Day After A Trickle Of Selling Picked Up Steam Tuesday

Most energy contracts are ticking lower for a 2nd day after a trickle of selling picked up steam Tuesday. ULSD futures are down a dime from Monday’s highs and RBOB futures are down 7 cents.

Diesel prices continue to look like the weak link in the energy chain, with futures coming within 1 point of their March lows overnight, setting up a test of the December lows around $2.48 if that resistance breaks down. Despite yesterday’s slide, RBOB futures still look bullish on the weekly charts, with a run towards the $3 mark still looking like a strong possibility in the next month or so.

The API reported crude stocks increased by more than 9 million barrels last week, while distillates were up 531,000 and gasoline stocks continued their seasonal decline falling by 4.4 million barrels. The DOE’s weekly report is due out at its normal time this morning.

RIN values have recovered to their highest levels in 2 months around $.59/RIN for D4 and D6 RINs, even though the recovery rally in corn and soybean prices that had helped lift prices off of the 4 year lows set in February has stalled out. Expectations for more biofuel production to be shut in due to weak economics with lower subsidy values seems to be encouraging the tick higher in recent weeks, although prices are still about $1/RIN lower than this time last year.

Reminder that Friday is one of only 3 annual holidays in which the Nymex is completely shut, so no prices will be published, but it’s not a federal holiday in the US so banks will be open.

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Pivotal Week For Price Action
Market TalkTuesday, Mar 26 2024

Refined Products Seeing Small Losses Of Around A Penny While Crude Oil Contracts Hover Just Above Break Even

Energy futures are taking a breather to start Tuesday’s trading, with refined products seeing small losses of around a penny while crude oil contracts hover just above break even.

No new news on either the Red Sea shipping or Russian Refining attacks this morning, so Cocoa prices seem to be taking over the commodity headlines while energy markets wait on their next big move.

RBOB gasoline futures set a new 6-month high Monday at $2.7711, which leaves the door open on the weekly charts for the spring rally to continue. A run at the $3 mark is certainly possible in the next few weeks before the typical seasonal price peak is set just before the start of driving season.

A container ship lost power and crashed into the Francis Scott Key bridge in Baltimore this morning, causing a devastating collapse. While cargo shipping into the area will no doubt be impacted by this event, fuel supplies are unlikely to see any notable change since the 9 fuel terminals in Baltimore are primarily supplied by Colonial pipeline. Barges from Philadelphia refineries do supplement Baltimore supplies at times, and those vessel flows will be impacted at least until rescue operations are completed and the bridge sections removed from the waterway. That said, since shipping up from the Gulf Coast via Colonial is generally cheaper than shipping an NY Harbor-priced barrel south, the amount of supply disrupted by this event will be minimal.

While we’re still waiting on the official forecasts for the Atlantic Hurricane season, early reports continue to suggest that we could be in for a very busy year due to warm water temperatures and a forming La Nina pattern.

Dallas meanwhile is preparing for a different sort of disruption, with city officials encouraging companies to let employees work from home during the solar eclipse on April 8th as metroplex traffic is expected to surge. While some isolated fuel outages are certainly possible if people start panic buying gasoline they don’t need, there’s no reason to expect any widespread impact from the demand spike.

Today’s interesting read: Why AI requires a staggering amount of electricity and may create supply competition for EVs that will end up benefitting fossil fuels.

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