Mixed Start To Energy Markets With Forward Gains Appearing Small

It’s another mixed start for energy markets as RBOB gasoline futures take a turn trying to lead the energy complex higher, while ULSD and WTI hover just below break-even in their prompt contract, while forward months see small gains.

While diesel prices are lagging today, their relative strength over the past month has pushed crack spreads in most U.S. markets to their highest level in more than a year. That improvement in margins is obviously a welcome change after a brutal 6-month stretch in Q4 and Q1 that led to several companies downsizing their workforces and 2 facilities announcing plans to close. While the margins are still a far cry from the record-setting levels we saw in 2022 and 2023, similar undercurrents of international demand pushing up domestic prices are at play.

That recent bit of good news for oil refiners is coming at the same time as oil producers are facing new struggles. Shell and Exxon have both issued warnings this week due to lower crude and natural gas prices, while Shell also highlighted weak results in its natural gas trading segment.

U.S. equity markets have pulled back after reaching fresh record highs last week, but that slide seems to have little influence on energy contracts that have seen little to any correlation with stocks over the past couple of months, despite the ongoing demand concerns related to the simmering trade wars.

RIN values started off Monday’s trade with a nickel drop, after the updated CFPC (45Z) rules, which are favorable to ethanol, bio and RD production, with the latter coming at the expense of SAF. Prices quickly rebounded, however, suggesting the reality sunk in that most bio and RD producers are still going to struggle to break even despite the updated law.

There were no refinery upsets reported following the latest round of heavy rains that swept a large portion of Texas Monday and led to more flood warnings. Terminals in both Austin and San Antonio appear to have continued functioning normally despite flash flood warnings and the devastation not far away.

Now that Tropical Storm Chantal has come and gone after dumping heavy rain on the East Coast, the NHC is predicting no tropical activity for the next week.