Refined Product Prices Are Tumbling Wednesday After RBOB Prices Extended Their Winning Streak To 7 Days Tuesday
Refined product prices are tumbling Wednesday after RBOB prices extended their winning streak to 7 days Tuesday, reaching a fresh 6 month high, while WTI also set a new 5-month high mark. ULSD futures are once again leading the move lower and are down more than a dime in the past two days, while gasoline prices are down a nickel in the early going. At this point the pullback looks more technical in nature, as short-term indicators had reached deep into overbought territory during the run-up, and not the result of any news in particular.
The Department of Energy updated its Fuel Economy calculation for EV’s Tuesday, which is apparently step 1 of a 4 part energy plan by the administration to walk the tightrope of constituents this election year. On one hand, there’s a “gotcha” moment for EV haters since the rule reduces the calculated fuel economy of an Electric Vehicle by 65%. On the other hand, by reducing the EV calculations, the DOE is also forcing auto-makers to be more efficient with their other vehicles since the EVs they produce will no longer bring down the fleet’s average efficiency by as much as it did under the old method. If you’re having trouble sleeping at night, you can read the entire 77 page explanation here.
The API reported that both gasoline and crude oil inventories dropped by 1.5 million barrels last week, while distillates increased by just over ½ million barrels. The DOE’s report is due out at its normal time today, with refinery runs still the important number to watch as BP is reportedly fully back online at Whiting, while several Gulf Coast plants still struggle to recover from a busy maintenance season and numerous unplanned upsets. It’s probably too soon to see any impact on the Russian export flows in the DOE’s report, but diesel exports in particular will be a number to watch in the coming weeks as buyers like Brazil are expected to return to the USGC after taking advantage of disadvantaged Russian supplies for more than a year.
The FOMC will give their latest monetary policy update at 1pm today, and pretty much nobody expects them to announce a change in interest rates today. The CME’s Fedwatch tool shows that traders give 99% probability of no change at today’s meeting, which leaves the big question on what the FED will foreshadow for the rest of the year. At this point, 95% odds are given of no change at the May 1 meeting, and 64% odds are given that the first rate cut will be announced June 12. With inflation creeping back recently, and fuel prices now adding to the increase after a year of pulling prices lower, traders seem to be on edge that the FOMC may signal a later date to start cutting rates.
The EIA this morning highlighted the growth in Intrastate natural gas pipelines in recent years, with both Texas and Louisiana taking advantage of their unique combination of production and coastal access to avoid federal red tape.
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