Soybean Oil Prices Reach Record High Levels
Energy futures are moving modestly lower for a second day after reaching two year highs Sunday night. The pullback so far has been minor, and has come on low volume, so it’s too soon to say that the upward momentum has been lost. As long as WTI can hold above $66, ULSD $2.03 and RBOB $2.12, the weekly charts continue to favor more upside.
RINs surged to new record highs Monday, even though corn and soybean prices reversed course during the day turning big early gains into losses later in the session. Soybean Oil prices have reached record high levels as consumers around the world compete for food, feed, and fuel.
It’s not just grains that are caught up in the clean energy commodity surge, Copper and other metals are seeing huge gains as the world realizes that it’s going to take a lot of those commodities to de-carbonize energy supplies, just in time for miners to be less willing to invest in new projects due to climate concerns of their own.
It’s that time of year again: The Atlantic Hurricane season is officially underway. There’s one system in the Caribbean given a 30% chance of developing over the next week, but it looks like it will probably hit Central America, not North America. With U.S. refining capacity dropping substantially in the past year, and demand getting back closer to normal, the supply chain is more vulnerable than it’s been in a decade if a hurricane happens to hit the heart of U.S. refining along the Gulf Coast. That could mean prices react with $1/gallon+ moves like they did following the hurricanes in 2005 and 2008, rather than the minor moves we saw in 2017 with Harvey and during last year’s record setting parade of storms.
If you want to see a smaller example of what that type of disruption could look like, take a look at rack prices in Colorado this week as the state’s only refinery goes through maintenance, and the refineries that would normally resupply it from Wyoming aren’t operating.
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.