Gas And Diesel Benchmarks Set New 7-Year Highs 

Market TalkThursday, Oct 14 2021
Pivotal Week For Price Action

Gas and diesel benchmarks set new 7-year highs in the overnight trading session with drawdowns in the refined product inventory estimates by the API is taking credit for the early morning buying. The Institute is showing a drop of 4.6 million barrels of national gasoline stocks, 2.3 million barrels for diesel, and a build of 5.2 million barrels of WTI crude oil. Interestingly enough, it’s crude oil futures that are leading the way higher this morning, despite the seemingly bearish inventory data. WTI and Brent are both tacking on over 1% in gains this morning, followed closely by refined product futures adding .8% so far today.

The EIA published their Short Term Energy Outlook around noon Wednesday. The monthly report, along with an accompanying article, highlighted the expectation of increased spending on home heating this winter due to elevated natural gas and heating oil prices in conjunction with colder-than-usual temperatures. The report also expects crude oil prices to drift lower through 2022, but the only range they can give with 95% confidence is that future prices will be somewhere between $40 and $140.

It’s not over but it’s looking good: the only tropical activity in the Atlantic Ocean is a small system given a 10% chance of development and heading out to no man’s land. While we may be past the peak of hurricane season, latecomers are still a possibility (i.e. Hurricane Sandy).

The Department of Energy’s weekly report is due out at 10am Central Time this morning. The last of the myriad fundamental reports to be released this week, the inventory levels published could put a punctuation mark on this week’s buying and carry further gains into the end of the week or dispel the API’s estimates and throw some cold water on this overcooked rally.

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

Market Talk Update 10.14.21

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Market TalkFriday, Mar 1 2024

Oil Futures Are Leading The Energy Complex In A Modest Rally To Begin March Trading

Oil futures are leading the energy complex in a modest rally to begin March trading, with WTI and Brent both up around $1.50/barrel, while refined products are adding around 2 cents in the early going.

RBOB gasoline futures rolled to a summer-grade RVP with the April contract in prompt position this morning. West Coast cash markets are already converted to summer grades, so they’re holding their premiums to futures, while the markets east of the Rockies are now trading at substantial discounts to futures as they move through their remaining winter-cycles over the next 4-6 weeks. The high trade for the April RBOB contract last month was just north of $2.63, which sets the first layer of resistance to a March madness gasoline rally just about 3 cents north of current values.

While gasoline looks somewhat bullish on the charts, and has seasonal factors working in its favor, diesel prices look weak in comparison with prices reaching a 6-week low Thursday before finally finding a bid, and the roll to April futures cut out 3 cents from prompt values. Diesel prices also don’t enjoy the seasonal benefits of gasoline, with a winter-that-wasn’t offering no help for supplemental diesel demand to replace natural gas in the US or Europe.

Speaking of winter weather, the West Coast continues to get the worst of it in 2024, with a casual 10 feet of snow with 100+ mile an hour wind gusts hitting the Sierra Nevada range. While the worst of that winter storm is happening far from the coast, the San Francisco bay area is under a gale warning starting this afternoon.

The wildfires in the Texas panhandle are now the largest in state history, impacting more than 1 million acres of land. The P66 Borger refinery is caught between the blazes, but so far has not reported any operational issues or plans to change operations at the facility. Valero’s McKee refinery is located just 50 miles from Borger, but looks to be far enough north and West to not be threatened by the fires, for now at least.

Mass Exxodus? A Reuters report noted that Exxon had notified its traders that it was cutting their salaries, in another sign that the major’s move back into trading wasn’t going so well. Exxon’s Exodus has already been a bit of a joke for the past few years, and now that the traders are being targeted, don’t be surprised if the cube photos are taken to a new level.

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

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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.

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