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Oil And Diesel Prices Continue To March Higher

Friday, Dec 20 2019
Market Talk

The December rally continues as oil and diesel prices continue to march higher, setting fresh 3-month highs on a daily basis in decidedly undramatic fashion. The small daily moves on light volume certainly give a counter argument to anyone suggesting this represents a true technical breakout, and while the activity has been lackluster so far, it feels like another big swing (similar to what we saw on Black Friday) could be coming any day.

US GDP grew 2.1% in the 3rd quarter, a “good enough” number that was in line with previous estimates, and should keep the FED from changing its plans for the early part of 2020. Equity and energy markets did not seem to react much to that news. For a more interesting take on this topic, take a look at how just 31 US counties make up 1/3 of Total US GDP, with Los Angeles leading the way.

Gasoline basis values on the Gulf Coast broke out of their winter doldrums Thursday, rallying nearly 3 cents/gallon in addition to the gains in futures on rumors of refinery issues. The reports were not substantiated in the state emission filings, so it’s hard to say if it was truly a refinery issue that caused the run-up, or if it had to do with lower liquidity and a scheduling deadline. If it’s the latter we would normally see those values drop back in the next few sessions, but with Christmas fast approaching, we may not see much activity at all.

Speaking of which, here’s Christmas Holiday Trading schedule: Tuesday 12/24 will see early settlements and closing for NYMEX futures contracts and spot market assessments will follow suit. Christmas day will have no futures or spot market activity until futures resume in the normal overnight session for Thursday. Thursday and Friday will be regular days for futures and spots, except that fewer people will be around to participate. Rack prices published Tuesday afternoon will carry through Thursday.

The giant 2,300 page spending bill (that apparently needs to be passed in order to know what’s in it) made it through the Senate on Thursday, and is expected to be signed by the President today. Here’s why that bill looks to be good news for numerous Renewable Diesel projects scheduled to come online in the next few years, but bad news for some electric vehicle projects.

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

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