We’re Seeing Plenty Of Choppy, Back And Forth Trading In Energy Markets This Week

We’re seeing plenty of choppy, back and forth trading in energy markets this week as the tug of war between tight supplies and a negative demand outlook continues, while numerous geopolitical headlines are keeping markets on edge. 

2 people in Poland were killed by a missile Tuesday, which appeared to help push energy prices higher until reports overnight that it may have been errant fire from Ukrainian air defenses, not a Russian attack that could have escalated the conflict. Adding to the chaos, a different missile attack knocked a pumping station offline and caused an oil pipeline traveling through Ukraine to cut flows to neighboring countries. 

Meanwhile Iran has apparently started up its saber rattling campaign again with reports that an fuel tanker off the Oman coast was hit by an armed drone overnight, a day after the US Navy intercepted a large shipment of explosives in the area.  

The API reported a large draw of nearly 6 million barrels of crude oil last week, despite another 4 million barrels being released from the SPR. Gasoline inventories were estimated to build by 1.7 million barrels while distillates increased by 842,000 barrels. The DOE’s weekly report is due out at its normal time this morning.  

Ethanol prices have been dropping this week, but could reverse course after a 3rd union has rejected the agreement with railroad operators, which may force congress to step in to avoid a nationwide rail strike.  The EPA was supposed to release its proposed rules for the RFS in 2023 today, but has received a 2 week extension to November 30. RINs are holding near 18 month highs as the market seems to be betting the agency will take a hard line on refiners. 

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