The Energy Complex Is Trading Lower This Morning With WTI Futures Leading The Way Lower

Market TalkMonday, Aug 15 2022
Pivotal Week For Price Action

The energy complex is trading lower this morning with WTI futures leading the way lower, shaving nearly $5 off the prompt month contract. Chinese low growth demand estimates are taking credit for this morning’s selloff which is pushing American crude oil prices down to the lowest levels seen since February this year. Refined product futures are following suit this morning with both gasoline and diesel prices dropping 10-13 cents.

Money managers trimmed their long positions and bolstered their short positions of WTI crude oil futures last week. The “smart” money earned their title’s quotations marks as the oil benchmark jumped nearly $4 from 8/8 to 8/12. Speculators did the same with their positions in RBOB, European crude oil, and gasoil last week but ULSD continued to stand out from its counterparts. Market bettors continued to trim their shorts resulting in an increase of their net position for the 6th week in a row.

The National Hurricane Center is tracking a storm just north of the Lesser Antilles but give the system a 0% chance of organizing within the next couple days. While it may seem like 2022’s Atlantic hurricane season is a snoozefest, its important to remember that on average the largest hurricanes typically come in the months of September and October.

RBOB futures are testing some technical support on their weekly charts this morning, possibly turning the low $2.90s into a key level in deciding whether prices can continue falling. Should gasoline prices fall and stay below that level, there is little on the charts to keep them from continuing lower to the $2.70s. Diesel futures on the other hand face a myriad of technical resistance levels between where we are trading currently, the $3.40s, and the $3.20s. If we see a meltdown in energy prices over the next couple weeks, expect distillate prices to drop much slower than the rest of the complex.

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Market Talk Update 08.15.22

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Market TalkFriday, Sep 29 2023

The Energy Bulls Are On The Run This Morning, Lead By Heating And Crude Oil Futures

The energy bulls are on the run this morning, lead by heating and crude oil futures. The November HO contract is trading ~7.5 cents per gallon (2.3%) higher while WTI is bumped $1.24 per barrel (1.3%) so far in pre-market trading. Their gasoline counterpart is rallying in sympathy with .3% gains to start the day.

The October contracts for both RBOB and HO expire today, and while trading action looks to be pretty tame so far, it isn’t a rare occurrence to see some big price swings on expiring contracts as traders look to close their positions. It should be noted that the only physical market pricing still pricing their product off of October futures, while the rest of the nation already switched to the November contract over the last week or so.

We’ve now got two named storms in the Atlantic, Philippe and Rina, but both aren’t expected to develop into major storms. While most models show both storms staying out to sea, the European model for weather forecasting shows there is a possibility that Philippe gets close enough to the Northeast to bring rain to the area, but not much else.

The term “$100 oil” is starting to pop up in headlines more and more mostly because WTI settled above the $90 level back on Tuesday, but partially because it’s a nice round number that’s easy to yell in debates or hear about from your father-in-law on the golf course. While the prospect of sustained high energy prices could be harmful to the economy, its important to note that the current short supply environment is voluntary. The spigot could be turned back on at any point, which could topple oil prices in short order.

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

Pivotal Week For Price Action
Market TalkThursday, Sep 28 2023

Gasoline And Crude Oil Futures Are All Trading Between .5% And .8% Lower To Start The Day

The energy complex is sagging this morning with the exception of the distillate benchmark as the prompt month trading higher by about a penny. Gasoline and crude oil futures are all trading between .5% and .8% lower to start the day, pulling back after WTI traded above $95 briefly in the overnight session.

There isn’t much in the way of news this morning with most still citing the expectation for tight global supply, inflation and interest rates, and production cuts by OPEC+.

As reported by the Department of Energy yesterday, refinery runs dropped in all PADDs, except for PADD 3, as we plug along into the fall turnaround season. Crude oil inventories drew down last week, despite lower runs and exports, and increased imports, likely due to the crude oil “adjustment” the EIA uses to reconcile any missing barrels from their calculated estimates.

Diesel remains tight in the US, particularly in PADD 5 (West Coast + Nevada, Arizona) but stockpiles are climbing back towards their 5-year seasonal range. It unsurprising to see a spike in ULSD imports to the region since both Los Angeles and San Francisco spot markets are trading at 50+ cent premiums to the NYMEX. We’ve yet to see such relief on the gasoline side of the barrel, and we likely won’t until the market switches to a higher RVP.

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