Gas Prices Survive Trip To Low End Of Trading Range

Market TalkThursday, Apr 8 2021
Pivotal Week For Price Action

The back and forth pattern continues after gasoline prices survived a trip to the low end of their trading range Wednesday. Large builds in refined products and a pullback in demand sparked a wave of selling following yesterday’s DOE report, but as has been the case for the past three weeks, buyers stepped in as prices approached chart support levels and ended the trading session on a strong note. 

It’s a mixed bag so far today with crude and diesel prices showing small losses, while gasoline has small gains. Reports of an unplanned shutdown of a refinery in Louisiana this morning seem to be helping RBOB prices go from small losses to modest gains on the day, and helping push gasoline time and crack spreads higher just as you’d expect when there’s a supply disruption. No details yet on the cause or duration of that shutdown.

Want a reason why yesterday’s gasoline inventory build isn’t something refiners need to worry about? Take a look at the gasoline import chart below, which shows an increase of 4.7 million barrels in total last week, which suggests the four million barrels build in total inventories isn’t a trend that will continue.

More bad news for the beleaguered refinery formerly known as Hovensa. Several executives are reportedly stepping down after the plant was forced to shut last week, and lost an expansion permit previously granted by the EPA. That may be good news for other refiners around the Atlantic basin if it’s a sign that the plant won’t operate, but could also just be a sign that the company is in the process of finding more capable operators.

The new U.S. corporate tax overhaul proposed Wednesday will (not surprisingly) look to increase incentives for renewable energy producers, and pay for it by removing incentives for energy produced from fossil fuels.  With

Meanwhile, the ports of Vancouver, Seattle and Tacoma laid out their plan to jump on the zero emission by 2050 bandwagon, focusing specifically on pushing ships to run on electricity while docked rather than idling their diesel engines to produce power. It does not appear that plan has detailed where that extra electricity will come from, or how it will be emissions free.

Click here to download a PDF of today's TACenergy Market Talk, including all charts from the DOE weekly status report.

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Market TalkFriday, Jul 19 2024

Summertime-Friday-Apathy Trade Influencing Energy Markets

Energy markets are treading water to start the day as the Summertime-Friday-Apathy trade seems to be influencing markets around the world in the early going. RBOB futures are trying for a 3rd straight day of gains to wipe out the losses we saw to start the week, while ULSD futures continue to look like the weak link, trading lower for a 2nd day and down nearly 3 cents for the week.

Bad to worse: Exxon’s Joliet refinery remains offline with reports that repairs may take through the end of the month. On top of that long delay in restoring power to the facility, ENT reported this morning that the facility has leaked hydrogen fluoride acid gas, which is a dangerous and controversial chemical used in alkylation units. Chicago basis values continue to rally because of the extended downtime, with RBOB differentials approaching a 50-cent premium to futures, which sets wholesale prices just below the $3 mark, while ULSD has gone from the weakest in the country a month ago to the strongest today. In a sign of how soft the diesel market is over most of the US, however, the premium commanded in a distressed market is still only 2 cents above prompt futures.

The 135mb Calcasieu Refinery near Lake Charles LA has been taken offline this morning after a nearby power substation went out, and early reports suggest repairs will take about a week. There is no word yet if that power substation issue has any impacts on the nearby Citgo Lake Charles or P66 Westlake refineries.

Two tanker ships collided and caught fire off the coast of Singapore this morning. One ship was a VLCC which is the largest tanker in the world capable of carrying around 2 million barrels. The other was a smaller ship carrying “only” 300,000 barrels (roughly 12 million gallons) of naphtha. The area is known for vessels in the “dark fleet” swapping products offshore to avoid sanctions, so a collision isn’t too surprising as the vessels regularly come alongside one another, and this shouldn’t disrupt other ships from transiting the area.

That’s (not) a surprise: European auditors have determined the bloc’s green hydrogen goals are unattainable despite billions of dollars of investment, and are based on “political will” rather than analysis. Also (not) surprising, the ambitious plans to build a “next-gen” hydrogen-powered refinery near Tulsa have been delayed.

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

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Market TalkThursday, Jul 18 2024

Refined Products Stanch Bleeding Despite Inventory Builds And Demand Slump

Refined products are trading slightly lower to start Thursday after they stopped the bleeding in Wednesday’s session, bouncing more than 2 cents on the day for both RBOB and ULSD, despite healthy inventory builds reported by the DOE along with a large slump in gasoline demand.

Refinery runs are still above average across the board but were pulled in PADD 3 due to the short-term impacts of Beryl. The Gulf Coast region is still outpacing the previous two years and sitting at the top end of its 5-year range as refiners in the region play an interesting game of chicken with margins, betting that someone else’s facility will end up being forced to cut rates before theirs.

Speaking of which, Exxon Joliet was reportedly still offline for a 3rd straight day following weekend thunderstorms that disrupted power to the area. Chicago RBOB basis jumped by another dime during Wednesday’s session as a result of that downtime. Still, that move is fairly pedestrian (so far) in comparison to some of the wild swings we’ve come to expect from the Windy City. IIR via Reuters reports that the facility will be offline for a week.

LA CARBOB differentials are moving in the opposite direction meanwhile as some unlucky seller(s) appear to be stuck long and wrong as gasoline stocks in PADD 5 reach their highest level since February, and held above the 5-year seasonal range for a 4th consecutive week. The 30-cent discount to August RBOB marks the biggest discount to futures since 2022.

The EIA Wednesday also highlighted its forecast for rapid growth in “Other” biofuels production like SAF and Renewable Naptha and Propane, as those producers capable of making SAF instead of RD can add an additional $.75/gallon of federal credits when the Clean Fuels Producer’s Credit takes hold next year. The agency doesn’t break out the products between the various “Other” renewable fuels, but the total projected output of 50 mb/day would amount to roughly 2% of total Jet Fuel production if it was all turned to SAF, which of course it won’t as the other products come along for the ride similar to traditional refining processes.

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

Pivotal Week For Price Action