Refined Product Futures Drift Higher After Monday's Abbreviated Trading Session

Energy futures held onto most of their gains through Monday’s abbreviated holiday trading session, and thus started Tuesday’s session with nickel gains for distillates and 4 cents for gasoline.     

There’s not much in the way of news moving prices so far this morning, with US equities pointing to a lower open while the US dollar is seeing modest gains with many headlines still obsessing over future interest rate policy.  

Brent Crude, which was open for a regular trading session Monday, is seeing a modest pullback today after reports that Russian oil exports surged ahead of the country’s self-imposed oil production cuts. 

Russia also said today it is suspending participation in its nuclear arms treaty with the US, in a sign of retaliation for the US president’s visit to Kiev Monday.  Separately, flows of Kazakh crude oil pledged to Germany through a Russian pipeline system have been delayed, without any reasons given, which could be just the latest swing of Russia’s shrinking energy sword.

The CFTC announced it would start trying to catch up on its 3 weeks of missing COT reports this Friday, starting by publishing the report that was originally scheduled for February 3rd, and then expediting the other two reports if all goes well.  

New idea or the same old scam?  United airlines and 5 corporate partners are launching a venture capital fund that will invest in companies developing SAF.  Never one to pass up a shameless plug, the airline said it will allow customers to donate to the fund in exchange for 500 frequent flier miles.   SAF development is getting more focus thanks to last year’s “Inflation creation Reduction Act” that offers $1.25/gallon in tax credits for SAF plus 1 cent per % point of reduction in greenhouse gas emissions below 50% of traditional fuels.  This credit is notably higher than the credits offered for Bio and Renewable diesel products that are competing for the same feedstocks and processing assets, leading many to believe that the development of SAF will be to the detriment of the on-road fuels.

The IEA issues another scolding to the oil and gas sector today in its latest Global Methane Tracker that suggests companies continue coming up short in efforts to curb emissions despite improving economics to do so. In recent weeks we’ve seen Exxon Mobil end a decade-long effort to develop algae as a renewable fuel source, and BP take a big step back from its emissions targets as the oil majors have apparently decided that they’ll continue acting like oil companies as long as the money is good. 

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Click here to read: February 20, 2023 Presidents Day Market Talk