U.S. Targets China For Role In Climate Change

Market TalkWednesday, Sep 23 2020
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A large draw in gasoline stocks has RBOB futures trying to pull the rest of the energy complex higher to start Wednesday’s trade. From a technical perspective, petroleum futures continue to look like they’re on shaky ground after two days of selling wiped out most of last week’s gains, with a test of June’s lows looking likely as we head into the seasonal demand slowdown in the U.S.

The API was reported to show a draw of 7.7 million barrels of gasoline last week, a drop in diesel inventories of 2.1 million barrels, while crude stocks had a small build of 691 thousand barrels.  The DOE’s weekly report is due out at its normal time this morning. Those draws in refined products are welcome news to beleaguered refiners, but could be short term anomalies given the numerous storm disruptions of the past week, rather than a sign of improving demand based on other reports. 

China is claiming that it will take a leadership role in climate change with a pledge to be carbon neutral by 2060. The announcement with no detail as to how that will work came just hours after the U.S. targeted China for its current role in climate change as the world’s largest polluter.

The FERC has issued an order opening up wholesale electricity markets to distributed energy resources, which will give individual homes (rooftop solar panel and garage EV chargers) more competitive options, and opens the door for aggregators to harness unused energy from those homes to sell back into the market, which is seen as a “game changer” for the expansion of these technologies.

A pair of interesting reads from the Financial Times and WSJ: Why Saudi Arabia’s threat to oil speculators is easier said than done (AKA, it’s hard to teach an algorithm a lesson). The latest example of the energy industry’s remarkable ability to over-heal itself: The new glut of pipeline capacity in the Permian.

Beta and Teddy are both dissipating after reaching land, with minimal impact on energy supply as ports are already reopening. There are no other threats being tracked by the NHC expected to develop in the next five days.     

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

TACenergy MarketTalk 092320

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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.