International Tanker Rates Have Increased

Market TalkWednesday, Oct 16 2019
Complex Managed To Shrug Off Sell-off In Equity Markets

International tanker rates reached an elevated $10/bbl yesterday, sending crude benchmarks lower Tuesday. Traders anticipate more crude will stay parked rather than being shipped for transcontinental arbitrages, leading to higher US stockpiles. That combined with an EIA estimate of an increase in shale oil production for November sent WTI 1.5% lower yesterday.

Two San Francisco Bay Area refineries experienced production disruptions yesterday in the wake of a 4.5 magnitude earthquake as measured by the US Geological Survey. Spot market reaction to the news was relatively mild for LA, with California grade diesel up about 2 cents on the news at yesterday’s settlement. The earthquake also caused a couple of ethanol tanks to catch fire at NuStar Energy’s Crockett plant. Fortunately the fire was quick contained and extinguished with no reported injuries.

The system in the Gulf of Mexico has cleared the Yucatan Peninsula and now has a 50% chance of organizing into a tropical storm over the next 5 days. Forecasts on its direction are still vague, placing its destination somewhere along the Texas and/or Louisiana coast. Refiners will be keeping a close eye on its progression and potential impacts.

 The energy complex is mixed this morning, with RBOB and Brent crude sinking lower while HO and WTI are showing green. Save any more drama from the Middle East or US-China bickering, traders will be looking to the inventory reports due out today and tomorrow for price direction. It will be interesting to see if the anticipated impact of the premium over crude carrier services will bring down American crude oil exports, which have set seasonal highs every week this year, over the next month.

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

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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.

Pivotal Week For Price Action
Market TalkTuesday, Mar 26 2024

Refined Products Seeing Small Losses Of Around A Penny While Crude Oil Contracts Hover Just Above Break Even

Energy futures are taking a breather to start Tuesday’s trading, with refined products seeing small losses of around a penny while crude oil contracts hover just above break even.

No new news on either the Red Sea shipping or Russian Refining attacks this morning, so Cocoa prices seem to be taking over the commodity headlines while energy markets wait on their next big move.

RBOB gasoline futures set a new 6-month high Monday at $2.7711, which leaves the door open on the weekly charts for the spring rally to continue. A run at the $3 mark is certainly possible in the next few weeks before the typical seasonal price peak is set just before the start of driving season.

A container ship lost power and crashed into the Francis Scott Key bridge in Baltimore this morning, causing a devastating collapse. While cargo shipping into the area will no doubt be impacted by this event, fuel supplies are unlikely to see any notable change since the 9 fuel terminals in Baltimore are primarily supplied by Colonial pipeline. Barges from Philadelphia refineries do supplement Baltimore supplies at times, and those vessel flows will be impacted at least until rescue operations are completed and the bridge sections removed from the waterway. That said, since shipping up from the Gulf Coast via Colonial is generally cheaper than shipping an NY Harbor-priced barrel south, the amount of supply disrupted by this event will be minimal.

While we’re still waiting on the official forecasts for the Atlantic Hurricane season, early reports continue to suggest that we could be in for a very busy year due to warm water temperatures and a forming La Nina pattern.

Dallas meanwhile is preparing for a different sort of disruption, with city officials encouraging companies to let employees work from home during the solar eclipse on April 8th as metroplex traffic is expected to surge. While some isolated fuel outages are certainly possible if people start panic buying gasoline they don’t need, there’s no reason to expect any widespread impact from the demand spike.

Today’s interesting read: Why AI requires a staggering amount of electricity and may create supply competition for EVs that will end up benefitting fossil fuels.

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