Energy Prices Holding Onto Modest Gains

Energy prices are holding onto modest gains as trading winds down on a strong week, month, and quarter for the petroleum complex. As Bloomberg noted this morning, this will mark a 5th straight quarter of gains for Brent crude oil prices, something we haven’t witnessed since the rally from $70 to $145 more than 10 years ago.

While Brent Crude & ULSD futures are trading near 4-year highs, WTI and RBOB futures are still holding below their summer levels, setting up an interesting tug-of-war for control of the petroleum complex as we enter the 4th quarter.

While concerns about global supply reductions (driven largely by Iranian sanctions and Venezuelan chaos) have helped fuel the rally this year, rising oil prices combined with rising interest rates and a stronger dollar are threatening to derail demand growth in emerging economies which could help prices stabilize in the coming year.

The US Justice department and EPA announced Thursday they’d reached a settlement with NGL over fraudulent RIN activity by Gavilon LLC prior to NGL’s acquisition of that company. The settlement included a $25 million penalty and a retirement of 10 million RINs.

Coincidentally, RIN markets have reached 5 year lows this week after the EPA released new data on the Renewable Fuel Standard which showed plenty of RINs available to meet obligations, and as rumors circulate that a new deal to satiate big Ag and Big Oil may be coming ahead of the mid-term elections.

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