Oil Prices Lower To Start The Week After Touching A 15 month High Last Week

Diesel prices are trying to drag gasoline and oil prices lower to start the week, with ULSD futures off by more than a nickel in early trading while the other contracts seem to be reluctant followers.

The slide in ULSD futures looks to be in sympathy with natural gas prices which are down 6% this morning after touching a 15 month high last week. Tight supplies in Europe had been a key driver in pushing gas prices higher, and a Reuters note that EU will continue talks with Ukraine on ways to renew gas transit deals through their county seems to be contributing to the pullback.

We got our first taste of the new administration’s tariff threats in action over the weekend as the US and Columbia came to terms over deportation flights following a threat of sanctions and tariffs on Columbia’s oil exports.

RIN values continued their rally to a post-election high last week, with D6 values trading around $.72, while D4’s go for around $.77. News that the President had ordered a delay in funding the 45Z Clean Fuels Production Credit added to the bullish RIN sentiment as producers are further slow output without the new credit to keep them afloat. On the other hand, California’s LCFS and CCA credits continued to slide as uncertainty swirls around CARB’s plans to make those programs more restrictive.

Money managers continue to struggle with timing energy contracts, increasing length and reducing short positions in ULSD and WTI contracts last week, which means they largely missed out on the first down-week of the new year. RBOB contracts did see an increase in new short bets which reduced the net length held by large speculators, suggesting the bandwagon jumpers aren’t yet ready to declare the start of the spring gasoline rally.

Baker Hughes reported a decline of 6 oil rigs drilling in the US last week, with the Permian basin accounting for the entire drop. The US natural gas rig count increased by 1.