Energy Market Enters September With A Bullish Sentiment

Market TalkFriday, Sep 1 2023
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Energy futures are climbing this morning with the prompt month distillate contract leading the way with ~1.4% gains to kick off September trading. RBOB, WTI, and Brent futures are following, trading up about 1% ahead of today’s formal session. Low global supply outlook due to production cuts from the world’s largest oil cartel seems to be outshining the so-far dismal ‘return’ of the Chinese economy this morning, taking credit for today’s bullish sentiment.

It isn’t just fundamental sentiment that’s bullish this morning: general biases based on a slew of technical indicators are also either confirming a current bullish trend or calling for higher prices in the short term. It should be noted, however, that if prices stay where they’re trading currently, this will mark the first in eight weeks that heating oil futures will end lower than the week before. Whether the weekly loss will signify a trend reversal, or it’s just a token bear trap, remains to be seen.

Retail gasoline prices are on the rise heading into the holiday weekend, as pointed out by the EIA on their website this morning. The Administration cites oil production cuts from OPEC+ and low national gasoline inventories, which are expected to stay low over the coming months due to the upcoming fall turnaround. The scheduled maintenance for Irving’s New Brunswick and Monroe’s Trainer refineries were named specifically.

While it looks scary, the 7-day hurricane forecasts in the Atlantic Basin are currently keeping all 4(!) named storms out to sea (including the remnants of Idalia who visited the eastern seaboard earlier this week), threatening only marine traffic and fish. So far this season U.S. energy infrastructure has remained more or less unscathed. The NOAA is tracking two disturbances off the west coast of Africa this morning, both of which will likely develop over the next week, one of which will churn slowly westward.

From the Market Update pdf (attached) find details for RBOB and HO Technicals.

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

Market Talk Update 09-01-23

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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.

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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.

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