It’s A Mixed Bag For Energy Futures So Far This Morning
It’s a mixed bag for energy futures so far this morning. American diesel and crude oil benchmarks are trading higher to start the day while gasoline futures seek to extend yesterday’s heavy selling. The prompt month RBOB contract, the main driver of national gasoline prices, has dropped over 25 cents from Monday and over a dollar since setting highs back in June.
Rumors of a very hot Consumer Price Index headline figure circulated news outlets yesterday afternoon. If confirmed to be correct, the CPI, used as a measure for how much general goods and services cost to the average consumer, has risen another 1.1% in June, bumping the annual inflation rate to 8.8%. The Bureau of Labor Statistics is set to release their report at 8:30 Eastern, and we’ll find out of the leaked figured were in fact fake.
The Energy Information Administration published an article today highlighting the continuation of lofty RIN prices last month. The EIA mentions it’s the increase in blend stock prices that is driving the credit prices higher, as a part of a story we are not unfamiliar with. It looks like it might be a different case this month as we see edible oils, wheat, and corn prices plummet as countries shift policies/strategies to cope with the shortages caused by the war in Ukraine.
Well the rumored CPI numbers ended up being fabricated, but the lie seems much more palatable than the truth. Inflation costs for consumers raised by 1.3% last month, compared to the 1.1% “estimated” yesterday, solidifying the annual inflation rate as the highest its been in 41 years. It won’t come as a surprise to anyone that commutes: the increase in the cost of gasoline was the largest month-over-month percentage point increase.
Click here to download a PDF of today's TACenergy Market Talk.
From the Bureau of Labor Statistics
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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.