Presidential Debate Expected To Be Potential Market Mover

Market TalkMonday, Sep 28 2020
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Refined products are ticking modestly higher for a fourth straight session to start the week, but have still not erased the heavy losses we saw last Monday. There is still little in the way of market moving news directly impacting energy prices – which seems to be why we’re seeing very small trading ranges in the past week. U.S. equity markets are pointed sharply higher after dropping for a fourth straight week last week, as bargain hunters appear to be betting that the September correction has now run its course.

The presidential debate on Tuesday is expected to be a potential market mover for stocks, which could trickle down to energy markets as well.  

Already permitting in the Permian basin has surged in the past few months even as prices remain below break-even levels for new drilling projects, which many believe is to avoid a potential ban on hydraulic fracturing if Biden wins the election. 

Baker Hughes reported four more oil rigs were put to work last week, two in the Permian and two in the Eagle Ford shale plays, marking just the fourth weekly increase since the start of COVID. 

Money managers increased their net length in WTI, Brent and RBOB contracts last week, driven primarily by short covering, although WTI did see a healthy increase in new long positions as well. ULSD continues to be the least favored among the large speculative class of trader, with another increase in the net short position (betting on lower prices) last week. 

The latest refining casualty in a rapidly growing list: PREEM announced it was scrapping a $1.6 billion expansion at the Sweden’s largest refinery as the fallout from COVID made the project unviable economically.

An IEA report this morning highlights the growing role of carbon capture technologies in the race for clean energy. 

The Financial Times is reporting that Trafigura – one of the world’s largest oil traders – announced a $2 billion investment in renewable projects. The company is also planning to set targets to reduce emissions from its existing operations, saying “We are going to set targets that are achievable...but I am not going to commit to something in 2050 that I am not around to deliver,” he said. “We will commit to something we can deliver on.”

After a few days with no storm systems in the Atlantic, the NHC is giving low (30%) odds of development to a system off the Eastern coast of central America. While the peak of the season is in the rearview mirror, it’s still expected we’ll see a few more storms in this extremely busy season before it ends November 30. As a reminder, Sandy was a Halloween storm.

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

TACenergy MarketTalk Update 092820

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Pivotal Week For Price Action
Market TalkThursday, Mar 28 2024

Energy Markets Are Ticking Modestly Higher Heading Into The Easter Weekend With Crude Oil Prices Leading The Way Up About $1.25/Barrel Early Thursday Morning

Energy markets are ticking modestly higher heading into the Easter Weekend with crude oil prices leading the way up about $1.25/barrel early Thursday morning, while gasoline prices are up around 2.5 cents and ULSD futures are about a penny.

Today is the last trading day for April HO and RBOB futures, an unusually early expiration due to the month ending on a holiday weekend. None of the pricing agencies will be active tomorrow since the NYMEX and ICE contracts are completely shut, so most rack prices published tonight will carry through Monday.

Gasoline inventories broke from tradition and snapped a 7 week decline as Gulf Coast supplies increased, more than offsetting the declines in PADDs 1, 2 and 5. With gulf coast refiners returning from maintenance and cranking out summer grade gasoline, the race is now officially on to move their excess through the rest of the country before the terminal and retail deadlines in the next two months. While PADD 3 run rates recover, PADD 2 is expected to see rates decline in the coming weeks with 2 Chicago-area refineries scheduled for planned maintenance, just a couple of weeks after BP returned from 7 weeks of unplanned repairs.

Although terminal supplies appear to be ample around the Baltimore area, we have seen linespace values for shipping gasoline on Colonial tick higher in the wake of the tragic bridge collapse as some traders seem to be making a small bet that the lack of supplemental barge resupply may keep inventories tight until the barge traffic can move once again. The only notable threat to refined product supplies is from ethanol barge traffic which will need to be replaced by truck and rail options, but so far that doesn’t seem to be impacting availability at the rack. Colonial did announce that they would delay the closure of its underutilized Baltimore north line segment that was scheduled for April 1 to May 1 out of an “abundance of caution”.

Ethanol inventories reached a 1-year high last week as output continues to hold above the seasonal range as ethanol distillers seem to be betting that expanded use of E15 blends will be enough to offset sluggish gasoline demand. A Bloomberg article this morning also highlights why soybeans are beginning to displace corn in the subsidized food to fuel race.

Flint Hills reported a Tuesday fire at its Corpus Christi West facility Wednesday, although it’s unclear if that event will have a material impact on output after an FCC unit was “stabilized” during the fire. While that facility isn’t connected to Colonial, and thus doesn’t tend to have an impact on USGC spot pricing, it is a key supplier to the San Antonio, Austin and DFW markets, so any downtime may be felt at those racks.

Meanwhile, P66 reported ongoing flaring at its Borger TX refinery due to an unknown cause. That facility narrowly avoided the worst wildfires in state history a few weeks ago but is one of the frequent fliers on the TCEQ program with upsets fairly common in recent years.

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, Mar 27 2024

Most Energy Contracts Are Ticking Lower For A 2nd Day After A Trickle Of Selling Picked Up Steam Tuesday

Most energy contracts are ticking lower for a 2nd day after a trickle of selling picked up steam Tuesday. ULSD futures are down a dime from Monday’s highs and RBOB futures are down 7 cents.

Diesel prices continue to look like the weak link in the energy chain, with futures coming within 1 point of their March lows overnight, setting up a test of the December lows around $2.48 if that resistance breaks down. Despite yesterday’s slide, RBOB futures still look bullish on the weekly charts, with a run towards the $3 mark still looking like a strong possibility in the next month or so.

The API reported crude stocks increased by more than 9 million barrels last week, while distillates were up 531,000 and gasoline stocks continued their seasonal decline falling by 4.4 million barrels. The DOE’s weekly report is due out at its normal time this morning.

RIN values have recovered to their highest levels in 2 months around $.59/RIN for D4 and D6 RINs, even though the recovery rally in corn and soybean prices that had helped lift prices off of the 4 year lows set in February has stalled out. Expectations for more biofuel production to be shut in due to weak economics with lower subsidy values seems to be encouraging the tick higher in recent weeks, although prices are still about $1/RIN lower than this time last year.

Reminder that Friday is one of only 3 annual holidays in which the Nymex is completely shut, so no prices will be published, but it’s not a federal holiday in the US so banks will be open.

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