'Reversal Thursday’ Holding True To Form This Week
Futures prices are taking a breather today with American gas, diesel, and crude oil futures all sagging anywhere from .5%-1% so far this morning. ‘Reversal Thursday’ is holding true to form this week as energy prices have rallied Monday-Wednesday and have sold off (so far) today. The question now is, will the rally continue tomorrow?
Just as one tropical disturbance peters off another pops up as a point of interest, this time with a little more development potential: 40% chance over the next five days. While the proto-storm has quite a ways to go before being considered a possible threat to the mainland US, its origin point and projected path are very similar to that of major hurricanes in the past.
Ethanol inventory levels have popped back into their 5-year range after spending 10 consecutive weeks setting new seasonal lows. Much like D6 RIN prices, ethanol prices have skyrocketed with corn prices for the past year. Now producers are considering output cutbacks to combat feedstock prices, a move that might explain why ethanol prices have remained elevated while corn futures have pulled back.
Oil futures are easing off their run at the $75 mark but still look poised to try a technical breakout in the near future. Even before that hurdle can be properly attempted, oil execs and banks are calling for $100 oil, not seen since 2014. While history is not always doomed to repeat itself, it should be noted the last two rallies that pushed oil north of $100 (2008 & recover rally in 2011) ended with WTI futures prices getting cut in half.
Click here to download a PDF of today's TACenergy Market Talk.
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Week 48 - US DOE Inventory Recap
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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.