News Of Oil Tanker Seized By Iranian Forces
Energy prices are coming under pressure for a 3rd straight day, although so far the theme of the sell-off has been bend, don’t break. News that an oil tanker had been seized by Iranian forces near the world’s most strategic waterway, had buyers step in Tuesday morning after an early wave of selling had the energy complex looking poised for a big drop. Reports this morning that the tanker had been released seems to have calmed fears of an immediate escalation that could disrupt supplies and has WTI trading back below $70.
Daily and weekly charts continue to suggest that prices have likely topped out after a 9 month rally, and the July lows of $2.07 for RBOB and $1.96 for ULSD look like the near term target to the downside.
The API reported inventory draws across the board last week, but even a decline of nearly 6 million barrels of gasoline wasn’t able to help prices sustain an overnight rally attempt. Oil stocks were said to decline by 879k barrels, while diesel was down 717k on the week. The EIA’s weekly stats should be out at 9:30 central.
Coffeyville Resources announced it was pausing its Renewable Diesel production at its Wynnewood, OK refinery due to high feedstock costs as oil refiners compete for other types of oil to take advantage of California’s credit programs and also help the environment. As the chart below shows, soybean oil prices have tripled in the past year as the race to make more renewables has refiners competing with food producers as the truly alternative feedstock sources like waste oils are depleted.
Marathon reported an operating profit for the first time since the pandemic hit. A few notes from their Q2 earnings release are included below.
Insult to injury: For those in the US struggling to maintain adequate supplies of jet fuel, the EIA this morning reminds you that inventories of Jet are above average across the country as refiners have rapidly ramped up production in recent months. It’s no surprise that refiners will gladly return Jet output after being forced to shift to other distillates last year when Jet demand collapses, as aviation fuels don’t create a RIN obligation, and save those producers somewhere around $.20/gallon as result. The shortage of drivers to get fuel from terminal storage to the end user tankage continues to be the bottleneck in the supply chain however, with more airports forced to ration their supplies as a result.
Click here to download a PDF of today's TACenergy Market Talk.
Latest Posts
The Energy Bulls Are On The Run This Morning, Lead By Heating And Crude Oil Futures
Gasoline And Crude Oil Futures Are All Trading Between .5% And .8% Lower To Start The Day
Week 39 - US DOE Inventory Recap
Crude Oil Futures Are Leading The Energy Complex Higher This Morning With WTI Jumping 2% And Exchanging Hands Above The $92
Social Media
News & Views
View AllThe Energy Bulls Are On The Run This Morning, Lead By Heating And Crude Oil Futures
The energy bulls are on the run this morning, lead by heating and crude oil futures. The November HO contract is trading ~7.5 cents per gallon (2.3%) higher while WTI is bumped $1.24 per barrel (1.3%) so far in pre-market trading. Their gasoline counterpart is rallying in sympathy with .3% gains to start the day.
The October contracts for both RBOB and HO expire today, and while trading action looks to be pretty tame so far, it isn’t a rare occurrence to see some big price swings on expiring contracts as traders look to close their positions. It should be noted that the only physical market pricing still pricing their product off of October futures, while the rest of the nation already switched to the November contract over the last week or so.
We’ve now got two named storms in the Atlantic, Philippe and Rina, but both aren’t expected to develop into major storms. While most models show both storms staying out to sea, the European model for weather forecasting shows there is a possibility that Philippe gets close enough to the Northeast to bring rain to the area, but not much else.
The term “$100 oil” is starting to pop up in headlines more and more mostly because WTI settled above the $90 level back on Tuesday, but partially because it’s a nice round number that’s easy to yell in debates or hear about from your father-in-law on the golf course. While the prospect of sustained high energy prices could be harmful to the economy, its important to note that the current short supply environment is voluntary. The spigot could be turned back on at any point, which could topple oil prices in short order.
Click here to download a PDF of today's TACenergy Market Talk.
Gasoline And Crude Oil Futures Are All Trading Between .5% And .8% Lower To Start The Day
The energy complex is sagging this morning with the exception of the distillate benchmark as the prompt month trading higher by about a penny. Gasoline and crude oil futures are all trading between .5% and .8% lower to start the day, pulling back after WTI traded above $95 briefly in the overnight session.
There isn’t much in the way of news this morning with most still citing the expectation for tight global supply, inflation and interest rates, and production cuts by OPEC+.
As reported by the Department of Energy yesterday, refinery runs dropped in all PADDs, except for PADD 3, as we plug along into the fall turnaround season. Crude oil inventories drew down last week, despite lower runs and exports, and increased imports, likely due to the crude oil “adjustment” the EIA uses to reconcile any missing barrels from their calculated estimates.
Diesel remains tight in the US, particularly in PADD 5 (West Coast + Nevada, Arizona) but stockpiles are climbing back towards their 5-year seasonal range. It unsurprising to see a spike in ULSD imports to the region since both Los Angeles and San Francisco spot markets are trading at 50+ cent premiums to the NYMEX. We’ve yet to see such relief on the gasoline side of the barrel, and we likely won’t until the market switches to a higher RVP.