Energy Markets Start The Week Conflicted

Market TalkMonday, Sep 23 2019
Quiet Start To End A Wild Week

Energy markets are having a hard time making up their mind to start the week as overnight gains of $1 for crude and 2-3 cents for refined products turned to early morning losses across the board. Middle-East supply tensions and global demand fears continue to be the leading culprits in the daily tug-of-war on prices, and the charts are offering little in the way of clarify as to what might come next. The EIA published a note this morning highlighting the impacts this event are having on global prices.

There are conflicting reports on how long it will take to bring that damaged Saudi oil infrastructure back online – Kingdom officials continue to insist the repairs will be done in weeks, while outsiders suggest it may take much longer - leaving market participants to guess what the real impact will be to global supply.

Iran has reportedly released the British oil tanker it seized back in July, which the market is taking as a sign of easing tensions ahead of UN meetings this week. The British Prime Minister meanwhile has joined several other nations placing blame on Iran for the attacks on Saudi oil assets last weekend, just in case anyone was worried that peace might break out.

TS Karen formed over the weekend and will head north over Puerto Rico this week. After that there’s plenty of uncertainty, but a chance that the storm could turn west and head towards Florida or other parts of the South Eastern US coast next week. Tropical Depression 13 also formed over the weekend and will need to be monitored as it begins its long trek across the Atlantic.

Although trading volumes hit all-time highs in several energy futures contracts during Monday’s huge price spike, money managers made little change in their overall net positions, and a slight decline in Brent’s net length suggest some speculators saw this as an opportune time to take some profits. Swap Dealers saw modest declines in their positions during the week, suggesting that industry participants used the rally as an opportunity to add to their forward hedge positions.

Baker Hughes reported a drop of 14 oil rigs operating in the US last week, bringing the total count to a fresh 2 year low. If prices can hang onto the gains set last week, it’s possible we could see the rig count bottom out in this current area, although those decisions will be made with a much longer time horizon – and take longer to implement – so don’t expect an immediate change.

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Pivotal Week For Price Action
Market TalkThursday, Mar 28 2024

Energy Markets Are Ticking Modestly Higher Heading Into The Easter Weekend With Crude Oil Prices Leading The Way Up About $1.25/Barrel Early Thursday Morning

Energy markets are ticking modestly higher heading into the Easter Weekend with crude oil prices leading the way up about $1.25/barrel early Thursday morning, while gasoline prices are up around 2.5 cents and ULSD futures are about a penny.

Today is the last trading day for April HO and RBOB futures, an unusually early expiration due to the month ending on a holiday weekend. None of the pricing agencies will be active tomorrow since the NYMEX and ICE contracts are completely shut, so most rack prices published tonight will carry through Monday.

Gasoline inventories broke from tradition and snapped a 7 week decline as Gulf Coast supplies increased, more than offsetting the declines in PADDs 1, 2 and 5. With gulf coast refiners returning from maintenance and cranking out summer grade gasoline, the race is now officially on to move their excess through the rest of the country before the terminal and retail deadlines in the next two months. While PADD 3 run rates recover, PADD 2 is expected to see rates decline in the coming weeks with 2 Chicago-area refineries scheduled for planned maintenance, just a couple of weeks after BP returned from 7 weeks of unplanned repairs.

Although terminal supplies appear to be ample around the Baltimore area, we have seen linespace values for shipping gasoline on Colonial tick higher in the wake of the tragic bridge collapse as some traders seem to be making a small bet that the lack of supplemental barge resupply may keep inventories tight until the barge traffic can move once again. The only notable threat to refined product supplies is from ethanol barge traffic which will need to be replaced by truck and rail options, but so far that doesn’t seem to be impacting availability at the rack. Colonial did announce that they would delay the closure of its underutilized Baltimore north line segment that was scheduled for April 1 to May 1 out of an “abundance of caution”.

Ethanol inventories reached a 1-year high last week as output continues to hold above the seasonal range as ethanol distillers seem to be betting that expanded use of E15 blends will be enough to offset sluggish gasoline demand. A Bloomberg article this morning also highlights why soybeans are beginning to displace corn in the subsidized food to fuel race.

Flint Hills reported a Tuesday fire at its Corpus Christi West facility Wednesday, although it’s unclear if that event will have a material impact on output after an FCC unit was “stabilized” during the fire. While that facility isn’t connected to Colonial, and thus doesn’t tend to have an impact on USGC spot pricing, it is a key supplier to the San Antonio, Austin and DFW markets, so any downtime may be felt at those racks.

Meanwhile, P66 reported ongoing flaring at its Borger TX refinery due to an unknown cause. That facility narrowly avoided the worst wildfires in state history a few weeks ago but is one of the frequent fliers on the TCEQ program with upsets fairly common in recent years.

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, 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.

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