RBOB Gasoline Futures Are Leading The Energy Complex Higher This Morning

RBOB gasoline futures are leading the energy complex higher this morning, despite more selling in equity markets as recession warning signals flash around the world. For this morning at least it appears that actual low inventory levels are outweighing the rumors of government intervention in fuel markets. 

Gasoline prices have bounced 26 cents from Tuesday’s rumor-driven lows as it appears that whatever plans the White House has to ease pollution controls to lower prices may go the way of the SPR release, E15 waivers and other straw-grasping to deal with the supply shortage.  

The API reported another large weekly draw of more than 4 million barrels of gasoline last week, which has helped RBOB futures lead the complex higher overnight. Diesel inventories saw a small decline of less than 1 million barrels, while crude stocks increased by only 567,000 barrels even though more than 6 million barrels were released from the SPR last week. The DOE’s report is due out at its regular time today, and will be delayed a day next week due to Memorial Day.

Speaking of which, futures will trade in an abbreviated session Monday, but the spot benchmarks (Argus, Platts, OPIS) will not be published. Those that remember the Black Friday meltdown in futures 6 months ago will be forced to keep an eye on things Monday morning.  

The return trip to reality for New York Harbor ULSD is nearly complete, with basis values dropping more than $1.20/gallon over the past 2 weeks, and outright values off more than $1.30. Feast to Famine: After the crazy spike in New York Jet fuel markets a little over a month ago, Colonial pipeline is hosting a surplus auction of Jet Fuel as apparently some shippers sent product north without a place to store it. It seems unlikely that we could see a similar situation with ULSD given the global tightness, but this industry does have a remarkable way of overhealing itself, especially when there are dollars, and not points, per gallon at stake.

So THAT’s why they’re based in Switzerland? Glencore has agreed to pay nearly $1.2 Billion to settle charges around the world of bribery and price manipulation in energy markets. The commodity price manipulation case centered around traders manipulating the Platts 30 minute trading window for fuel oil products. Platts was not a target of the investigation and maintains its methodology is sound. Meanwhile, people who get their car stolen out of their own driveway can still get a ticket if they left the vehicle running unattended in several states.  

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