Oil And Diesel Prices Trading At Multi-Year Highs

Market TalkTuesday, Jun 1 2021
Pivotal Week For Price Action

Oil and diesel prices are trading at multi-year highs as June trading gets underway, with the charts favoring additional upside if this early rally can hold. Gasoline prices are also rallying, but are still two cents below their highs for the year. There’s not much fundamental news to pin the 3% rally on this morning. Equities are pointing higher and the dollar is pointing lower, both of which can encourage the energy bulls, and of course there are the usual suspects of demand optimism, shrinking global inventories and a lack of a deal with Iran that can take blame for any rally.

Money managers added to their long bets in WTI and ULSD last week, while cutting back on RBOB and Brent positions. A large round of short covering pushed ULSD’s net length to its highest level in 2.5 years, but unlike recent weeks, its European counterpart Gasoil did not increase in tandem.

Baker Hughes reported a net increase of three oil rigs working in the U.S. last week, two of which were in the Permian basin. That brings the Permian and Total U.S. counts to fresh one year highs, but the totals are still just over half of what they were prior to the pandemic, even as oil prices are approaching three year highs.

ExxonMobil’s pipeline company reported a gasoline leak in Harris County over the weekend and shut the line as investigations and repairs get underway. It’s not yet clear which if the company’s numerous pipeline segments in the area is impacted by that shutdown, and what terminal(s) may feel a supply crunch as a result, but there’s a good chance since it was gasoline that spilled it was the line running to DFW that is offline. 

Today’s Interesting read from the WSJ: Why the Californication of fuel programs will make $5 gasoline a reality.

The IEA published a look this morning at the types and sources of biofuels that will help achieve a net zero by 2050 scenario, with organic waste streams expected to take the largest piece of the supply chain, followed by short rotation woody crops.

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Pivotal Week For Price Action
Pivotal Week For Price Action
Market TalkWednesday, Nov 29 2023

The API Reported Gasoline Inventories Dropped By 898,000 Barrels Last Week

Gasoline and oil prices are attempting to rally for a 2nd straight day, a day ahead of the delayed OPEC meeting, while diesel prices are slipping back into the red following Tuesday’s strong showing. 

The API reported gasoline inventories dropped by 898,000 barrels last week, crude inventories declined by 817,000 barrels while distillates saw an increase of 2.8 million barrels. Those inventory stats help explain the early increases for RBOB and WTI while ULSD is trading lower. The DOE’s weekly report is due out at its normal time this morning. 

A severe storm on the Black Sea is disrupting roughly 2% of the world’s daily oil output and is getting some credit for the bounce in futures, although early reports suggest that this will be a short-lived event. 

Chevron reported that its Richmond CA refinery was back online after a power outage Monday night. San Francisco spot diesel basis values rallied more than a dime Tuesday after a big drop on Monday following the news of that refinery being knocked offline.

Just a few days after Scotland’s only refinery announced it would close in 2025, Exxon touted its newest refinery expansion project in the UK Tuesday, with a video detailing how it was ramping up diesel production to reduce imports and possibly allow for SAF production down the road at its Fawley facility. 

Ethanol prices continue to slump this week, reaching a 2-year low despite the bounce in gasoline prices as corn values dropped to a 3-year low, and the White House appears to be delaying efforts to shift to E15 in an election year. 

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

Pivotal Week For Price Action
Market TalkTuesday, Nov 28 2023

Values For Space On Colonial’s Main Gasoline Line Continue To Drop This Week

The petroleum complex continues to search for a price floor with relatively quiet price action this week suggesting some traders are going to wait and see what OPEC and Friends can decide on at their meeting Thursday. 

Values for space on Colonial’s main gasoline line continue to drop this week, with trades below 10 cents/gallon after reaching a high north of 18-cents earlier in the month. Softer gasoline prices in New York seems to be driving the slide as the 2 regional refiners who had been down for extended maintenance both return to service. Diesel linespace values continue to hold north of 17-cents/gallon as East Coast stocks are holding at the low end of their seasonal range while Gulf Coast inventories are holding at average levels.

Reversal coming?  Yesterday we saw basis values for San Francisco spot diesel plummet to the lowest levels of the year, but then overnight the Chevron refinery in Richmond was forced to shut several units due to a power outage which could cause those differentials to quickly find a bid if the supplier is forced to become a buyer to replace that output.

Money managers continued to reduce the net length held in crude oil contracts, with both Brent and WTI seeing long liquidation and new short positions added last week. Perhaps most notable from the weekly COT report data is that funds are continuing their counter-seasonal bets on higher gasoline prices. The net length held by large speculators for RBOB is now at its highest level since Labor Day, at a time of year when prices tend to drop due to seasonal demand weakness. 

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