Seasonal Divergence In Demand For Refined Products

Market TalkFriday, Sep 17 2021
Pivotal Week For Price Action

Gasoline prices are moving modestly lower for a 2nd straight day, while diesel contracts are holding near multi-year highs as the seasonal divergence in demand for the refined products seems to be influencing prices again.

RINs have been the big mover this week with D6 ethanol values dropping to a 6 month low after reports that the blending quotas may have been leaked. Insert your own Trading Places joke here. 

Nicholas has stalled out over Louisiana, dumping heavy rains on areas of the Gulf Coast still trying to recover from Ida, 3 new potential storms are lurking in the Atlantic. The first is given 70% odds of developing over the next 5 days, and may brush the coast of North Carolina as it moves North East, and should avoid a direct landfall. The 2nd is also given high odds of developing and could be a threat to the East Coast next week. The third has low odds of formation as we move through the halfway point of another busy hurricane season. 

Today’s interesting reads: Why Chevron’s CEO sees tight supplies and higher prices for petroleum products persisting, and why a spike in natural gas prices is having widespread effects on various supply chains, particularly across Europe. The EIA this morning reported that the US barely held on to its status as a net exporter of petroleum products in the first half of 2021. With Europe scrambling to find new power supply options, and natural gas suddenly a hot commodity again, US producers are faced with an increasingly unpopular but increasingly profitable decision to boost production levels. 

Speaking of unpopular: The President suggested that “Bad Actors” are behind the rise in gasoline prices this year, a claim the AP (along with just about everyone in the industry) finds to be baseless. 

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

Market Update 9.17.21

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Pivotal Week For Price Action
Market TalkThursday, Feb 29 2024

It's Another Mixed Start For Energy Futures This Morning After Refined Products Saw Some Heavy Selling Wednesday

It's another mixed start for energy futures this morning after refined products saw some heavy selling Wednesday. Both gasoline and diesel prices dropped 7.5-8.5 cents yesterday despite a rather mundane inventory report. The larger-than-expected build in crude oil inventories (+4.2 million barrels) was the only headline value of note, netting WTI futures a paltry 6-cent per barrel gain on the day.

The energy markets seem to be holding their breath for this morning’s release of the Personal Consumption Expenditures (PCE) data from the Bureau of Economic Analysis (BEA). The price index is the Fed’s preferred inflation monitor and has the potential to impact how the central bank moves forward with interest rates.

Nationwide refinery runs are still below their 5-year average with utilization across all PADDs well below 90%. While PADD 3 production crossed its 5-year average, it’s important to note that measure includes the “Snovid” shutdown of 2021 and throughput is still below the previous two years with utilization at 81%.

We will have to wait until next week to see if the FCC and SRU shutdowns at Flint Hills’ Corpus Christi refinery will have a material impact on the regions refining totals. Detail on the filing can be found on the Texas Commission on Environmental Quality website.

Update: the PCE data shows a decrease in US inflation to 2.4%, increasing the likelihood of a rate cut later this year. Energy futures continue drifting, unfazed.

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, Feb 28 2024

It’s Red Across The Board For Energy Prices So Far This Morning With The ‘Big Three’ Contracts All Trading Lower To Start The Day

It’s red across the board for energy prices so far this morning with the ‘big three’ contracts (RBOB, HO, WTI) all trading lower to start the day. Headlines are pointing to the rise in crude oil inventories as the reason for this morning’s pullback, but refined product futures are leading the way lower, each trading down 1% so far, while the crude oil benchmark is only down around .3%.

The American Petroleum Institute published their national inventory figures yesterday afternoon, estimating an 8+ million-barrel build in crude oil inventory across the country. Gasoline and diesel stocks are estimated to have dropped by 3.2 and .5 million barrels last week, respectively. The official report from the Department of Energy is due out at its regular time this morning (9:30 CST).

OPEC’n’friends are rumored to be considering extending their voluntary production cuts into Q2 of this year in an effort to buoy market prices. These output reductions, reaching back to late 2022, are aimed at paring back global supply by about 2.2 million barrels per day and maintaining a price floor. On the flip side, knowledge of the suspended-yet-available production capacity and record US output is keeping a lid on prices.

How long can they keep it up? While the cartel’s de facto leader (Saudi Arabia) may be financially robust enough to sustain itself through reduced output indefinitely, that isn’t the case for other member countries. Late last year Angola announced it will be leaving OPEC, freeing itself to produce and market its oil as it wishes. This marks the fourth membership suspension over the past decade (Indonesia 2016, Qatar 2019, Ecuador 2020).

The spot price for Henry Hub natural gas hit a record low, exchanging hands for an average of $1.50 per MMBtu yesterday. A rise in production over the course of 2023 and above average temperatures this winter have pressured the benchmark to a price not seen in its 27-year history, much to Russia’s chagrin.

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