Diesel Prices Are Finally Bouncing After 3 Days Of Heavy Selling Pushed Prices Down By 26 Cents/Gallon

Gasoline prices are attempting to rally for a 2nd day after touching their lowest levels of the year on Wednesday. We’ll need to see prices rally another couple of cents to avoid a 3rd consecutive weekly loss however, and another 8 cents to break the downward trend on the weekly charts. Seasonal factors are working against gasoline bulls this time of year with just 2 weeks left before the Thanksgiving hangover kicks off the winter demand doldrums.

Diesel prices are finally bouncing after 3 days of heavy selling pushed prices down by 26 cents/gallon. December ULSD ticked below $2.70 a couple of times in the past 24 hours, but has since rallied to $2.75, adding a new short-term layer of chart support. We’ll need to see prices rally back above the $2.90 range to break the bearish trend lines on the weekly chart and prove that this recovery rally is more than a dead-cat bounce.

Q3 earnings reports are wrapping up this week, with the continued theme of strong results for traditional refiners, while renewable producers (and EV manufacturers) are all seeing more headwinds.

Suncor highlighted improvements in its operational and safety efforts in its Q3 earnings report that allowed its refineries to operate above 100% of nameplate capacity for the quarter after a brutal start to the year. The company did not mention anything about the change to reformulated gasoline in the Denver market but did note that it’s rapidly expanding its fleet of autonomous trucks in its oil-sands operations, which is one way to handle the industry’s driver shortage. 

Today, we have 31 trucks operating at base plant autonomously. By second quarter 2024, it will be 45, and by year end ‘24, it will be 91. If our data is correct, this will be the largest single mine fleet of autonomous ultra-class trucks globally.

Citgo also reported strong operating results, with 95% refinery utilization during Q3 and solid margins as we saw from all of the other US refiners. The company oddly highlighted the Tampa fuel contamination issue under its “operational excellence” section of the report, without mentioning the costs associated with taking the terminal out of commission for months or running out dozens of customers in the area just before a category 4 hurricane made landfall. 

Darling ingredients (Valero’s partner in the Diamond Green RD joint venture) highlighted the challenges posed by the declines in RIN and LCFS values during the quarter with a sharp drop in RD margins.   Their note also suggested that new RD production is not coming online as quickly as anticipated this year. 

Clean Energy Fuel’s Q3 earnings report further highlighted the plight of renewables producers due to the fall in RIN values, with a net loss of $25 million this quarter vs an $8 million loss last year, despite positive traction with their renewable natural gas engine rollout.

And finally, a bit of Friday humor courtesy of the financial times, who knows how to properly distract readers when their website isn’t functioning correctly.

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