It’s Green Across The Board For Energy Futures This Morning

Market TalkTuesday, Sep 19 2023
Pivotal Week For Price Action

It’s green across the board for energy futures this morning with distillate prices leading the way higher with 1.8% gains. Crude oil is trading above $92.50 so far today, looking to extend its 3-week rally as it pushes to new yearly highs.

There’s not much in the way of driving headlines this morning with major news sources pointing to the very familiar tight global supply outlook resulting from Saudi Arabian and Russian production cuts. Today that sentiment is bolstered by the report the EIA published yesterday, highlighting its expectation of declining US oil production, specifically in the Permian Basin.

Unless you live in Reykjavik there isn’t much reason to track Hurricane Nigel as it churns in the middle of the Atlantic. The fourteenth named storm of the 2023 Atlantic hurricane season is projected to stay out to sea and will likely only disrupt marine traffic for the next week or so. There are a couple disturbances brewing and one system has been given a 70% chance of cyclonic development over the next 7 days.

It’s been almost a week since the reopening of Libyan ports brought ~1 million barrels of crude oil back to the world market, but that doesn’t mean the drama is over. The country’s population is protesting, demanding accountability from the Russia-backed warlord who rules over Derna, the city that flooded and killed thousands. While there is no indication these protests have affecting oil exports, that becoming a reality isn’t farfetch’d, as we’ve seen similar situations in the past.

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

Market Talk Update 09.19.2023

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Pivotal Week For Price Action
Market TalkFriday, Sep 29 2023

The Energy Bulls Are On The Run This Morning, Lead By Heating And Crude Oil Futures

The energy bulls are on the run this morning, lead by heating and crude oil futures. The November HO contract is trading ~7.5 cents per gallon (2.3%) higher while WTI is bumped $1.24 per barrel (1.3%) so far in pre-market trading. Their gasoline counterpart is rallying in sympathy with .3% gains to start the day.

The October contracts for both RBOB and HO expire today, and while trading action looks to be pretty tame so far, it isn’t a rare occurrence to see some big price swings on expiring contracts as traders look to close their positions. It should be noted that the only physical market pricing still pricing their product off of October futures, while the rest of the nation already switched to the November contract over the last week or so.

We’ve now got two named storms in the Atlantic, Philippe and Rina, but both aren’t expected to develop into major storms. While most models show both storms staying out to sea, the European model for weather forecasting shows there is a possibility that Philippe gets close enough to the Northeast to bring rain to the area, but not much else.

The term “$100 oil” is starting to pop up in headlines more and more mostly because WTI settled above the $90 level back on Tuesday, but partially because it’s a nice round number that’s easy to yell in debates or hear about from your father-in-law on the golf course. While the prospect of sustained high energy prices could be harmful to the economy, its important to note that the current short supply environment is voluntary. The spigot could be turned back on at any point, which could topple oil prices in short order.

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

Pivotal Week For Price Action
Market TalkThursday, Sep 28 2023

Gasoline And Crude Oil Futures Are All Trading Between .5% And .8% Lower To Start The Day

The energy complex is sagging this morning with the exception of the distillate benchmark as the prompt month trading higher by about a penny. Gasoline and crude oil futures are all trading between .5% and .8% lower to start the day, pulling back after WTI traded above $95 briefly in the overnight session.

There isn’t much in the way of news this morning with most still citing the expectation for tight global supply, inflation and interest rates, and production cuts by OPEC+.

As reported by the Department of Energy yesterday, refinery runs dropped in all PADDs, except for PADD 3, as we plug along into the fall turnaround season. Crude oil inventories drew down last week, despite lower runs and exports, and increased imports, likely due to the crude oil “adjustment” the EIA uses to reconcile any missing barrels from their calculated estimates.

Diesel remains tight in the US, particularly in PADD 5 (West Coast + Nevada, Arizona) but stockpiles are climbing back towards their 5-year seasonal range. It unsurprising to see a spike in ULSD imports to the region since both Los Angeles and San Francisco spot markets are trading at 50+ cent premiums to the NYMEX. We’ve yet to see such relief on the gasoline side of the barrel, and we likely won’t until the market switches to a higher RVP.

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

Pivotal Week For Price Action