Energy Rally Continues For Third Straight Day

Oil and diesel prices have reached their highest levels since April overnight, while gasoline prices are pushing 3-week highs as the energy rally continues for a third consecutive day. Futures trading will end early this afternoon, and there won’t be a settlement for the Juneteenth holiday, and all of today’s trading activity will show up as part of the June 20th trading session on the charts.

Spot markets around the country are not being assessed today so most in the industry are taking the day off, and unless the rally in futures picks up steam this morning, it’s unlikely we’ll see many changes in rack prices until tomorrow.

The API reported a draw in gasoline inventories of just over 1 million barrels last week, while crude oil inventories increased by 2.3 million barrels, and diesel stocks increased by half a million barrels. The DOE’s weekly report is delayed until 11 am Eastern time tomorrow due to the holiday. The API’s report is the latest data point that suggests gasoline demand has finally picked up after a slow start to the driving season, proving that heat waves are more conducive to gasoline consumption than the parade of rainstorms most of the country dealt with for a large part of the spring.

The Oil and Ag continued their unusual partnership, filing a second joint lawsuit against the EPA for its new emissions standards, this time focusing on the over-the-road trucking industry. The oil industry is arguing the new emissions standards are simply physically unachievable, while the farm lobby is accusing the EPA of abandoning biofuels after two decades of mandating their use.

The P66 Borger refinery reported another FCC upset yesterday, which appears to have forced the company to cut runs on that unit again.

Exxon reported an upset that forced the shutdown of a hydrotreating unit at its Baytown, TX refinery Tuesday. The report said the impact on operations was minimal.

The NHC continues to track 3 separate storm systems near the U.S. this week. Potential Tropical Cyclone One is still expected to be named a tropical storm later today as it begins dumping heavy rain all along the Gulf of Mexico. This system does not pose a major threat to energy infrastructure, although flash flooding and power outages will be a concern for some refiners along the coast, with Corpus Christi-area plants the closest to the center of the large storm system, which could possibly hinder the restart efforts at Citgo’s Corpus facility. For the most part, it looks like this system will just bring a bunch of rain to parts of South Texas and northern Mexico that could really use it. The other two systems are still given low odds of development, but we’ll need to keep an eye on the second potential Gulf of Mexico storm for a couple more days just to be sure there’s no threat there.

Click here to download a PDF of today's TACenergy Market Talk.