Gasoline Eases, Managers Stay Bullish on Diesel

Gasoline prices are leading the energy complex lower to start the week, threatening to break the bullish trend lines that have been pushing prices higher since the 4th of July. 

We’re seeing some potentially pivotal short term support levels tested in early trading this morning.  The $3.09 range that was a temporary ceiling (aka resistance) for ULSD now looks like it might be the floor (support) near term.   If prices can hold above that level, the flag pattern established after the 11-day winning streak will still be in play, keeping the door open for a run at $3.50.  If we see that level break and hold however, we could soon see prices drop back below $3. 

Money managers are still bullish on diesel prices, increasing net length for both ULSD and Gasoil contracts again last week, continuing to bet that prices can keep climbing after 7 straight weeks of gains.   The big funds look like they may have thrown in the towel on RBOB prices however with new shorts being added and a healthy amount of long liquidations last week.  If those funds continue to liquidate, we could see a snowball effect on gasoline prices heading lower, particularly if RBOB fails to hold above the $2.90 range this morning.

Baker Hughes reported that the US oil rig count held steady last week, snapping an 8-week slide, but the natural gas rig count dropped by 5 to reach its lowest level since February 2022.  

There were several refinery hiccups reported to the TCEQ over the weekend, which so far don’t look like they’ll be major factors in the market this week.

Marathon reported yet another leak at its Galveston Bay refinery Friday, after announcing it would take months to fully repair operations at the facility after the deadly fire in May.

Delek reported another upset at its Big Spring facility that is usually good for a flaring event every couple of weeks.

A facility you’ve probably never heard of known as the gas to gasoline plant in Beaumont was shut down yesterday after a valve failed.  That facility is part of a project aimed at ultimately producing renewable gasoline after converting waste biomass to methanol, but earlier reports on the facility suggest it won’t be making any finished gasoline until next year.

After a quiet few weeks for tropical activity in the Atlantic basin, the NHC is tracking 2 potential systems this morning, although both are given low (20%) odds of being named.

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