Eye-Popping Statistics Continue To Roll In

Market TalkWednesday, Apr 8 2020
Energy Prices Set All Sorts Of Records

The optimism that was pushing energy and equity prices sharply higher Tuesday morning faded away in the afternoon, sparking another wave of selling, albeit less dramatic than what we became accustomed to in March.

Energy prices are off to a quiet start Wednesday as traders appear to be taking a wait-and-see approach ahead of the OPEC & Friends meeting Thursday. There’s also a G20 oil minister meeting Friday that could have some bearing on oil production, but it falls on Good Friday, one of only three holidays all year when futures trading is completely shut down, and the only non-federal U.S. holiday in which this occurs.

The eye-popping statistics continue to roll in as economic reports start to catch up to the unprecedented slowdown we’ve experienced in the past few weeks.

The EIA’s monthly Short Term Energy Outlook highlights how the energy world has changed so dramatically in the past month, and predicts that the U.S. will return to being a net importer of petroleum products as domestic oil production is forced to slow down, and the global market for refined products slows down our exports.

The API estimated U.S. oil stocks rose by nearly 12 million barrels last week, while gasoline stocks increased by 9.5 million barrels and distillates continued to buck the trend with a small decline of 177,000 barrels. The DOE/EIA’s version of the weekly stats will be out at its normal time, and should have more record setting numbers.

They aren’t negative yet, but prompt values for conventional subgrade gasoline in the Group 3 spot market ended Tuesday around 17 cents/gallon, as regional stockpiles swelled north of 50 days’ worth of supply with demand crumbling, forcing sales to unheard of levels some 47 cents below futures. Chicago and LA spot values aren’t too far behind, both trading at record discounts 36 and 34 cents below futures respectively, putting outright values right around 30 cents/gallon this morning.

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

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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.