Fresh Lows Hit Overnight
WTI hit a fresh 18 year low overnight at $19.20/barrel, and ULSD futures briefly traded below $0.90/gallon for the first time since January of 2016. These losses seemed to be spurred on by the API inventory report which was said to show a 13 million barrel build in U.S. oil stocks, and a 5.6 million build in diesel inventories.
After spending most of March as the weak link in the petroleum chain, RBOB gasoline continues to put on its relative strength show, making modest gains for a fifth straight trading session. U.S. gasoline stocks built by a more modest 2.2 million barrels according to the API estimate. Despite doubling in value over the past three weeks, RBOB is still not managing to break overhead resistance at $0.77/gallon, leaving the contract susceptible to another wave of heavy selling.
In most years, this week would mark the beginning of the end of the spring gasoline RVP transition. Most pipelines have converted to summer-grades, and spot markets are trading exclusively on the more stringent product before terminals have their tanks turned by month end. This year however, there remains plenty of confusion as waivers and delays of varying degrees from the state and federal levels leave shippers and terminal operators unsure of their deadlines. Those with full storage tanks of winter-grade product are unsure of what they’ll do if further waivers aren’t granted. The EPA this week issued guidelines in how it is planning to streamline some of its refined and renewable fuel, including a less-complicated plan for summertime RFG VOC requirements, and separately issued a PSA on flushing toilet paper.
A marathon debate on whether or not to mandate reductions in oil output in Texas took place Tuesday, with tensions running high and conclusions running low. The very un-Texan idea of a government mandate on oil may end up being unnecessary, as the industry is already being forced to make drastic cuts due to a lack of capital in some cases, and tankage in others.
We’ll get to see how that tankage is holding up in today’s DOE weekly status report as producers race to keep pace with the largest demand drop in history. The IEA’s monthly oil market report pegs that demand drop globally at 29 million barrels/day for April (nearly 30 percent) and 9.3 million barrels/day for the year, wiping out a decade’s worth of growth in just a few months.
Click here to download a PDF of today's TACenergy Market Talk.
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Week 48 - US DOE Inventory Recap
The API Reported Gasoline Inventories Dropped By 898,000 Barrels Last Week
Values For Space On Colonial’s Main Gasoline Line Continue To Drop This Week
After Another Black Friday Selloff Pushed Energy Futures Sharply Lower In Last Week’s Holiday-Shortened Trading
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Week 48 - US DOE Inventory Recap
The API Reported Gasoline Inventories Dropped By 898,000 Barrels Last Week
Gasoline and oil prices are attempting to rally for a 2nd straight day, a day ahead of the delayed OPEC meeting, while diesel prices are slipping back into the red following Tuesday’s strong showing.
The API reported gasoline inventories dropped by 898,000 barrels last week, crude inventories declined by 817,000 barrels while distillates saw an increase of 2.8 million barrels. Those inventory stats help explain the early increases for RBOB and WTI while ULSD is trading lower. The DOE’s weekly report is due out at its normal time this morning.
A severe storm on the Black Sea is disrupting roughly 2% of the world’s daily oil output and is getting some credit for the bounce in futures, although early reports suggest that this will be a short-lived event.
Chevron reported that its Richmond CA refinery was back online after a power outage Monday night. San Francisco spot diesel basis values rallied more than a dime Tuesday after a big drop on Monday following the news of that refinery being knocked offline.
Just a few days after Scotland’s only refinery announced it would close in 2025, Exxon touted its newest refinery expansion project in the UK Tuesday, with a video detailing how it was ramping up diesel production to reduce imports and possibly allow for SAF production down the road at its Fawley facility.
Ethanol prices continue to slump this week, reaching a 2-year low despite the bounce in gasoline prices as corn values dropped to a 3-year low, and the White House appears to be delaying efforts to shift to E15 in an election year.
Click here to download a PDF of today's TACenergy Market Talk.
Values For Space On Colonial’s Main Gasoline Line Continue To Drop This Week
The petroleum complex continues to search for a price floor with relatively quiet price action this week suggesting some traders are going to wait and see what OPEC and Friends can decide on at their meeting Thursday.
Values for space on Colonial’s main gasoline line continue to drop this week, with trades below 10 cents/gallon after reaching a high north of 18-cents earlier in the month. Softer gasoline prices in New York seems to be driving the slide as the 2 regional refiners who had been down for extended maintenance both return to service. Diesel linespace values continue to hold north of 17-cents/gallon as East Coast stocks are holding at the low end of their seasonal range while Gulf Coast inventories are holding at average levels.
Reversal coming? Yesterday we saw basis values for San Francisco spot diesel plummet to the lowest levels of the year, but then overnight the Chevron refinery in Richmond was forced to shut several units due to a power outage which could cause those differentials to quickly find a bid if the supplier is forced to become a buyer to replace that output.
Money managers continued to reduce the net length held in crude oil contracts, with both Brent and WTI seeing long liquidation and new short positions added last week. Perhaps most notable from the weekly COT report data is that funds are continuing their counter-seasonal bets on higher gasoline prices. The net length held by large speculators for RBOB is now at its highest level since Labor Day, at a time of year when prices tend to drop due to seasonal demand weakness.
Click here to download a PDF of today's TACenergy Market Talk.