Energy Futures Drift Higher Ahead of Debt Ceiling Negotiations, DOE Report

Refined products are moving modestly higher to start Wednesday’s session as energy and equity markets appear to have entered wait-and-see mode as the debt drama drags on in Washington. 

The API reported crude inventories increased by 3.7 million barrels last week, as another 2.4 million barrels were released from the SPR.  Gasoline inventories were estimated to have declined by 2.5 million barrels, while diesel stocks dropped by 886,000 barrels.

The EIA’s weekly report is due out at its normal time.  The agency released a note this morning highlighting that US propane demand dropped to its lowest level ever this past winter due to warm weather.  That phenomenon also put heavy downward pressure on diesel and natural gas prices. 

A Financial Times article Tuesday highlights a glut of oil drilling equipment as the latest signal that US producers are slowing down operations. 

RIN values continue to slowly bleed lower, with D6 values settling below the $1.50 mark for the first time this year, which opens a bit of a technical trap door that could send prices down another 20-30 cents if anyone actually pays attention to RIN charts. 

As Cap & Trade participants gear up for the quarterly CCA auction later today, a WSJ article highlights how the race to take advantage of California’s LCFS credits have generated unintended consequences for renewable energy producers elsewhere. 

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