The Slide Continues This Morning With Fuel Futures Down Another 2% And Oil Down 3%

Market TalkWednesday, May 31 2023
Pivotal Week For Price Action

Energy futures settled down around 4% across the board yesterday. RBOB and HO prompt month contracts lost just shy of 11 and 9 cents, respectively, and WTI and Brent dropped $3.21 and $3.38 on the day. The slide continues this morning with fuel futures down another 2% and oil down 3%, following a report showing a decline in the Chinese manufacturing purchasing managers index. The uncertain economic situation has resulted in reduced expectations for oil demand and downward pressure on oil prices. Attention is now turned to the upcoming June 4 OPEC+ meeting to determine whether further production cuts will be implemented.

Southern Rock Energy Partners is proposing the construction of a large-scale oil refinery in Cushing, Oklahoma, the oil hub which sets the WTI benchmark. If successful, it would be the first refinery built in the US in 50 years and could potentially lower gasoline and diesel prices. The refinery, with a projected capacity of 250,000 barrels per day, would exclusively process US-produced oil. However, analysts remain doubtful about the project's viability due to the complexities involved in obtaining permits, securing financing, and navigating the volatile nature of the industry.

Equitrans Midstream, the energy company with the largest stake in the 303-mile MVP Pipeline, saw a boost in its stock price yesterday following the inclusion of favorable provisions in the tentatively supported debt ceiling agreement in the House of Representatives. The agreement's provisions, which limit judicial review and accelerate federal permits, increase the likelihood of approval for the MVP Pipeline. However, the debt ceiling deal still requires congressional approval, and potential legal challenges outside the agreement's parameters may arise. Despite optimism, the pipeline's approval is not guaranteed.

Following a partial restart in April, the Cenovus Toledo Refinery in Ohio, formerly owned by BP, is set to restart its larger 115,000 b/d crude unit this week after being shut down since an explosion took the lives of two workers back in September last year. The company expects to resume planned run rates after the restart.

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Market Talk Update 05.31.2023

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Pivotal Week For Price Action
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