Equity And Energy Markets Impact From Federal Court Block Of Tariffs

Energy futures have given up overnight gains sparked by news that a U.S. Federal Court had blocked the vast majority of the tariffs announced so far this year. Equity markets around the world rallied on that news, and refined products were up around 3 cents overnight, only to see those gains evaporate this morning with products down about a penny at 8am central.

The selloff for energy contracts continues the week’s pattern of moving in contrast to equity markets as traders seem to be more focused on upcoming changes in supply from OPEC and friends than they do on potential demand impacts that are showing up in stock prices.

Another pattern becoming evident this week is a selloff in calendar spreads for refined products, with RBOB and ULSD prompt values giving up all of their gains vs the July contract over the past several days. That slide suggests that concerns over supply shortages with numerous refinery disruptions, and the restart of several facilities after spring maintenance may both be at play.

While oil and refined products have largely been exempted from the tariff wars, any delays in implementing tariff charges would be welcome news for biofuel producers whose feedstocks have not avoided the fees. It may not be enough for many producers who were already struggling to make ends meet in 2024, even with the $1/gallon BTC still in place, particularly since Used Cooking Oil feedstocks aren’t eligible for the new CFPC (AKA 45Z).

Chevron has announced another round of layoffs at one of its remaining biodiesel production facilities in Iowa, after shuttering 2 plants last year (prior to the BTC expiration). Iowa meanwhile is trying to figure out ways to save its dying biofuel producers and passed a new tax credit of 25 cents/gallon for SAF refined in the state, or that uses eligible feedstocks produced in the state.

The API estimated a decline in oil and gasoline inventories of 4.2 million and 528,000 barrels respectively, while diesel stocks increased by 1.3 million barrels. The DOE’s weekly report is due out at noon eastern time.

Valero reported an another upset at its Corpus Christi West plant Wednesday that lasted 5 hours and was caused by a power disruption. That facility also reported a power disruption on May 19 that affected multiple units.