NYMEX Futures Trade In An Abbreviated Session

Market TalkMonday, Jan 18 2021
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It’s MLK Day, so NYMEX Futures are trading in an abbreviated session and won’t have a settlement today. The Spot market assessors are all closed for the day and most cash traders and brokers have taken the day off as well, meaning most rack prices posted Friday will carry through until Tuesday.

The NYMEX contracts are picking up where they left off Friday with some modest selling. While the upward momentum was clearly lost last week, the bullish trendlines remain intact for now, but WTI needs to hold on above $52 to avoid a larger correction. 

Baker Hughes reported a net increase of eight oil rigs drilling in the U.S. last week, the eighth straight weekly increase in that count. The total rig count is now at a fresh eight month high, but remains less than half of what it was pre-COVID. The Permian basin accounted for the entire move last week, adding 10 rigs while the rest of the basins in the country declined by two.

Speaking of the Permian basin, ExxonMobil responded to a report in that an employee that claimed the company was overstating the value of its assets in the Permian basin. The company’s argument was that the actual drilling performance exceeds the modeling used. 

The EPA on Friday issued a proposed rulemaking that would waive refiners RFS obligation for a year due to the devastating impacts COVID has had on the industry. RIN prices barely flinched however, as the move is seen as symbolic only as the new administration will be in control before the 30 day comment period on the proposal ends. Since one of the new President’s first acts is expected to be redacting the Keystone XL pipeline permits, few expect that his administration will go out of its way to help traditional refiners.

Money managers seemed conflicted last week, increasing bets on higher oil and gasoline prices while cutting back on distillate net length. Colder weather in parts of the world has caused a spike in some regional natural gas markets, but so far that strength does not seem to be spilling over into diesel fuel. 

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

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Pivotal Week For Price Action
Market TalkThursday, Feb 29 2024

It's Another Mixed Start For Energy Futures This Morning After Refined Products Saw Some Heavy Selling Wednesday

It's another mixed start for energy futures this morning after refined products saw some heavy selling Wednesday. Both gasoline and diesel prices dropped 7.5-8.5 cents yesterday despite a rather mundane inventory report. The larger-than-expected build in crude oil inventories (+4.2 million barrels) was the only headline value of note, netting WTI futures a paltry 6-cent per barrel gain on the day.

The energy markets seem to be holding their breath for this morning’s release of the Personal Consumption Expenditures (PCE) data from the Bureau of Economic Analysis (BEA). The price index is the Fed’s preferred inflation monitor and has the potential to impact how the central bank moves forward with interest rates.

Nationwide refinery runs are still below their 5-year average with utilization across all PADDs well below 90%. While PADD 3 production crossed its 5-year average, it’s important to note that measure includes the “Snovid” shutdown of 2021 and throughput is still below the previous two years with utilization at 81%.

We will have to wait until next week to see if the FCC and SRU shutdowns at Flint Hills’ Corpus Christi refinery will have a material impact on the regions refining totals. Detail on the filing can be found on the Texas Commission on Environmental Quality website.

Update: the PCE data shows a decrease in US inflation to 2.4%, increasing the likelihood of a rate cut later this year. Energy futures continue drifting, unfazed.

Click here to download a PDF of today's TACenergy Market Talk, including all charts from the Weekly DOE Report.

Pivotal Week For Price Action
Pivotal Week For Price Action
Market TalkWednesday, Feb 28 2024

It’s Red Across The Board For Energy Prices So Far This Morning With The ‘Big Three’ Contracts All Trading Lower To Start The Day

It’s red across the board for energy prices so far this morning with the ‘big three’ contracts (RBOB, HO, WTI) all trading lower to start the day. Headlines are pointing to the rise in crude oil inventories as the reason for this morning’s pullback, but refined product futures are leading the way lower, each trading down 1% so far, while the crude oil benchmark is only down around .3%.

The American Petroleum Institute published their national inventory figures yesterday afternoon, estimating an 8+ million-barrel build in crude oil inventory across the country. Gasoline and diesel stocks are estimated to have dropped by 3.2 and .5 million barrels last week, respectively. The official report from the Department of Energy is due out at its regular time this morning (9:30 CST).

OPEC’n’friends are rumored to be considering extending their voluntary production cuts into Q2 of this year in an effort to buoy market prices. These output reductions, reaching back to late 2022, are aimed at paring back global supply by about 2.2 million barrels per day and maintaining a price floor. On the flip side, knowledge of the suspended-yet-available production capacity and record US output is keeping a lid on prices.

How long can they keep it up? While the cartel’s de facto leader (Saudi Arabia) may be financially robust enough to sustain itself through reduced output indefinitely, that isn’t the case for other member countries. Late last year Angola announced it will be leaving OPEC, freeing itself to produce and market its oil as it wishes. This marks the fourth membership suspension over the past decade (Indonesia 2016, Qatar 2019, Ecuador 2020).

The spot price for Henry Hub natural gas hit a record low, exchanging hands for an average of $1.50 per MMBtu yesterday. A rise in production over the course of 2023 and above average temperatures this winter have pressured the benchmark to a price not seen in its 27-year history, much to Russia’s chagrin.

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