Energy Prices Were Seeing Some Modest Selling Overnight Following A Cease-Fire Agreement Between Israel And Hamas

Energy prices were seeing some modest selling overnight following a cease-fire agreement between Israel and Hamas, and the selling picked up steam around 7:15am following reports that OPEC is delaying its weekend meeting, which suggests the cartel members may be having a hard time reaching a consensus. Refined products were down 3-4 cents overnight, but those losses increased to 7-cents following the OPEC delay, wiping out a large portion of the gains we’ve seen the past few days. 

The pullback has several short-term technical indicators flashing sell signals, just when it looked like prices might be ready to stage a breakout from the 3-month down trend. The good news for consumers is the pullback in prices since the summer means average retail prices across the US are down more than 10% from a year ago, right in time for one of the busiest travel days ever in the US. 

Prices for gasoline space on Colonial have started to ease this week, dropping from 18-cents to 12, following promising reports of successful restart efforts at the Trainer PA refinery that had been shut down for extended maintenance. Diesel values continue to hold near their highest levels in a year above 14 cents/gallon as Gulf Coast refiners are seeing barrels back up, and shipping options are limited due to a variety of factors such as the shutdown of Kuwait’s huge refinery and chaos in the Panama Canal that is delaying resupply efforts in New York. Of course, if those gulf coast refiners weren’t limited by the Jones Act, the logistics would be much simpler. 

Now would be the perfect time for either the Dangote refinery in Nigeria or the Dos Bocas refinery in Mexico to begin their long-overdue production and fill the void in the Atlantic basin, but despite so many promises that startup is imminent, neither facility appears to be selling any on-spec products yet.

Reminder that futures will trade in an abbreviated session tomorrow but will not settle.  Friday will be another short trading session for futures, with a settlement posting. None of the spot market assessors will be open either day so many contract prices will hold through Monday, while rack prices may change depending on what the futures markets do while everyone is gone.

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