Energy Prices Are Moving Lower Again To Start Wednesday’s Trading, After Tuesday’s Rally Attempt Was Repelled

Energy prices are moving lower again to start Wednesday’s trading, after Tuesday’s rally attempt was repelled. Negative demand news from China and inventory builds are getting credit for the early selling, while US stock markets are also seeing some modest losses this morning as control of the US congress remains in doubt after Tuesday’s elections

The API reported US commercial oil inventories increased by 5.6 million barrels last week, with 3.6 million barrels released from the SPR. Gasoline stocks also saw a sizeable build in gasoline stocks of 2.5 million barrels, while distillates declined by 1.7 million. The DOE’s weekly report is due out at its normal time this morning.

How much is diesel worth in New York these days? Depends on who you’re asking, and which day you want it. Yesterday, the two major spot pricing agencies were more than 45 cents/gallon apart on their assessment of “prompt” ULSD in the NYH spot market with one pegging them close to $5/gallon while the other was just above $4.50. The higher assessment places those barrels nearly $1.30 above USGC values, but by the time you could actually ship a barrel to the harbor from Houston, that spread is less than half of that. 

West Coast basis values continue to rally, with LA Spot CARBOB approaching a $1/gallon premium to futures in Tuesday’s session, while diesel values rallied again, marking a 40 cent increase off of last week’s lows.  A fire broke out overnight at an LA-area refinery, which certainly won’t help cool off prices, although the extent of any operational impact remains unclear, and the video showing firefighters standing just a few yards from the flames suggests it may not have been as severe an incident as the headlines may have you believe.

Tropical storm Nicole is still expected to reach Hurricane strength before making landfall in Florida overnight. A shift south in the storm’s path moves it more than 100 miles south of Cape Canaveral, after it looked like that port (and its fuel terminals) would be within 30 miles of the storm’s eye yesterday. That does mean the storm will be closer to the Pt Everglades facilities, but they’re still 80+ miles from the current path, and on the “clean” side of the storm that will be pushing water out to sea rather than inland.  The new path also takes a direct hit on Orlando off the table, so at this point, it looks like we may see another bullet dodged for fuel supply facilities like we did with Ian. The storm will bring heavy rains to Charlotte and DC this weekend which could further pressure gasoline demand that has already started its seasonal slide.

Schadenfreude alert:  Digital currencies that promised to replace cash are now crashing due to a lack of cash. 

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