Rally In Energy Prices Has Resumed
After a 1-day break, the rally in energy prices has resumed Thursday with Brent crude back above $82, and ULSD futures reaching their highest since February 2015. Concerns over Iranian sanctions continue to take most of the blame in headlines for the move higher while some bearish data points in Wednesday’s DOE report have quickly become yesterday’s news.
US Crude inventories built modestly as US production reached a record high at 11.1 million barrels/day. That production figure is 1.5 million barrels/day more than what the US was producing at this time last year.
Refinery runs dropped by more than 5% on the week, led by a dramatic drop in PADD 2 (Midwest) runs of nearly ½ million barrels/day as a busy fall maintenance season appears to be coming to fruition. Several reports over the past year suggest that we may see more refinery maintenance than normal in the next year as plants prepare for the spec change in Marine diesel starting in 2020.
Total petroleum demand saw another large slump last week as the DOE’s estimate for gasoline fell by more than ½ million barrels/day last week, dropping below 9 million barrels/day for the first time since May.
As expected, the FOMC raised interest rates for a 3rd time this year, and suggested it would stick with its plan to raise rates a 4th time in December. Equity markets initially rallied as the statement omitted a sentence from previous meetings that suggested the FED was looking more dovish on rates, but that optimism was short lived as US stocks sold off heavily into the close.
In other news, Energy Secretary Rick Perry said yesterday that the US is not considering a release of the SPR to offset the impact of sanctions on Iran.
Nearly 5.5 years after the FBI raid that shocked the industry, the former president of PFJ was sentenced to more than 12 years in prison for his role in a scheme to defraud customers.
Latest Posts
Week 48 - US DOE Inventory Recap
The API Reported Gasoline Inventories Dropped By 898,000 Barrels Last Week
Values For Space On Colonial’s Main Gasoline Line Continue To Drop This Week
After Another Black Friday Selloff Pushed Energy Futures Sharply Lower In Last Week’s Holiday-Shortened Trading
Social Media
News & Views
View All
Week 48 - US DOE Inventory Recap
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.
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.