Large Inventory Declines Across The Board Last Week
More back and forth action for energy markets this morning as 1.5 cent gains overnight have flipped to 1.5 cent losses.
The API was said to report large inventory declines across the board last week, which isn’t surprising when almost all Gulf of Mexico oil output was closed due to Hurricane Ida, along with roughly 10% of the country’s refining capacity. Expect more of the same from the DOE’s version of the weekly status report which is due out at 11am eastern time.
Tropical storm Mindy was named late Wednesday and moved onshore in northern Florida overnight, dumping more rain on an area that’s had plenty already this year. Hurricane Larry continues to churn through the Atlantic but is not going to hit the US coast. 2 other systems are being watched by the NHC, one in the Caribbean is given just a 30% chance of developing, but is still expected to bring more heavy rain to the Texas Coast next week.
The EIA’s short term energy outlook reduced demand expectations slightly for the next year, but noted that tight supplies caused by lower refinery runs should keep prices relatively high near term, after retail gasoline prices reached a 7 year high this summer. The report did acknowledge the influence that high RIN Prices were having on gasoline. One other interesting note from the STEO: The Producer/Merchant category of trader has shifted to a net long position in WTI futures for the first time in 2 years. That means, on average, oil producers are not hedging their oil output with crude trading near $70/barrel (aka locking in prices at multi year highs) even though they were willing to lock in prices when they were in the $30 range.
Ethanol prices meanwhile have spiked nearly 30 cents so far in September, even though corn prices have dropped to their lowest levels of the year. A lack of liquidity in ethanol futures makes seeing the forward curve challenging, but it appears that this spike is a reflection of short term shortages not a long term change in values.
Click here to download a PDF of today's TACenergy Market Talk.
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Week 48 - US DOE Inventory Recap
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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.