Daily Coronavirus Market Teeter-Totter

Market TalkWednesday, Nov 18 2020
Market Talk Updates - Social Header

After trading lower for most of Tuesday’s session, energy futures staged a strong rally in the last 15 minutes of trading before settlement and that upward momentum has carried through to this morning, in spite of inventory builds in crude and gasoline last week. In the daily coronavirus market teeter-totter, longer term vaccine optimism is winning over short term shutdown concerns today after another positive finding on Pfizer’s experimental drug.    

The API reported a large build in crude stocks of 4.1 million barrels last week, while gasoline stocks increased slightly by 256,000 barrels. Distillates meanwhile had a large decrease of five million barrels on the week, consistent with the evidence we’re seeing in numerous markets in the Midwest, Rockies and South West that diesel supplies have suddenly become tight. 

This situation feels similar to what we saw with the first round of shutdowns in the spring where gasoline demand reacted faster, and distillates were strong for another month or so, but then gasoline consumption recovered much faster. The DOE’s weekly report is due out at its normal time this morning, but it will likely take another week or two for the impact of the latest closures to show up in the nationwide data. 

Another COVID refinery casualty? BP filed notice with Illinois and Chicago officials of possible layoffs exceeding the reporting threshold of 250 salaried employees. It’s unclear at this point if these layoffs might impact the office operations in Chicago or Naperville, IL, or if they could mean that some unit(s) could be closed at the Whiting, IN refinery, the largest production facility in PADD 2, and the sixth largest in the country. 

Not done yet? After hurricane Iota became the second major hurricane pound central America in two weeks, the NHC is tracking two more potential storm systems today. The good news is both systems are given low (20%) odds of developing in the next five days. The bad news is several hurricanes in the parade of storms that ended up hitting the U.S. already this year started in similar fashion, so we’ll be stuck watching weather right through the end of the official hurricane season November 30 and probably beyond.

This hurricane season set records for the number of storms to form in the Atlantic basin, and the number of storms to hit the U.S. Coast. The EIA this morning highlighted the impact on Gulf of Mexico oil production, which dropped by the most in 12 years due to these storms. Numerous refineries were also shut down, some more than once, due to the parade of storms, and yet prices barely flinched due to the weak demand situation. 

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

TACenergy MarketTalk 111820

News & Views

View All
Pivotal Week For Price Action
Pivotal Week For Price Action
Market TalkWednesday, Mar 27 2024

Most Energy Contracts Are Ticking Lower For A 2nd Day After A Trickle Of Selling Picked Up Steam Tuesday

Most energy contracts are ticking lower for a 2nd day after a trickle of selling picked up steam Tuesday. ULSD futures are down a dime from Monday’s highs and RBOB futures are down 7 cents.

Diesel prices continue to look like the weak link in the energy chain, with futures coming within 1 point of their March lows overnight, setting up a test of the December lows around $2.48 if that resistance breaks down. Despite yesterday’s slide, RBOB futures still look bullish on the weekly charts, with a run towards the $3 mark still looking like a strong possibility in the next month or so.

The API reported crude stocks increased by more than 9 million barrels last week, while distillates were up 531,000 and gasoline stocks continued their seasonal decline falling by 4.4 million barrels. The DOE’s weekly report is due out at its normal time this morning.

RIN values have recovered to their highest levels in 2 months around $.59/RIN for D4 and D6 RINs, even though the recovery rally in corn and soybean prices that had helped lift prices off of the 4 year lows set in February has stalled out. Expectations for more biofuel production to be shut in due to weak economics with lower subsidy values seems to be encouraging the tick higher in recent weeks, although prices are still about $1/RIN lower than this time last year.

Reminder that Friday is one of only 3 annual holidays in which the Nymex is completely shut, so no prices will be published, but it’s not a federal holiday in the US so banks will be open.

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

Pivotal Week For Price Action
Market TalkTuesday, Mar 26 2024

Refined Products Seeing Small Losses Of Around A Penny While Crude Oil Contracts Hover Just Above Break Even

Energy futures are taking a breather to start Tuesday’s trading, with refined products seeing small losses of around a penny while crude oil contracts hover just above break even.

No new news on either the Red Sea shipping or Russian Refining attacks this morning, so Cocoa prices seem to be taking over the commodity headlines while energy markets wait on their next big move.

RBOB gasoline futures set a new 6-month high Monday at $2.7711, which leaves the door open on the weekly charts for the spring rally to continue. A run at the $3 mark is certainly possible in the next few weeks before the typical seasonal price peak is set just before the start of driving season.

A container ship lost power and crashed into the Francis Scott Key bridge in Baltimore this morning, causing a devastating collapse. While cargo shipping into the area will no doubt be impacted by this event, fuel supplies are unlikely to see any notable change since the 9 fuel terminals in Baltimore are primarily supplied by Colonial pipeline. Barges from Philadelphia refineries do supplement Baltimore supplies at times, and those vessel flows will be impacted at least until rescue operations are completed and the bridge sections removed from the waterway. That said, since shipping up from the Gulf Coast via Colonial is generally cheaper than shipping an NY Harbor-priced barrel south, the amount of supply disrupted by this event will be minimal.

While we’re still waiting on the official forecasts for the Atlantic Hurricane season, early reports continue to suggest that we could be in for a very busy year due to warm water temperatures and a forming La Nina pattern.

Dallas meanwhile is preparing for a different sort of disruption, with city officials encouraging companies to let employees work from home during the solar eclipse on April 8th as metroplex traffic is expected to surge. While some isolated fuel outages are certainly possible if people start panic buying gasoline they don’t need, there’s no reason to expect any widespread impact from the demand spike.

Today’s interesting read: Why AI requires a staggering amount of electricity and may create supply competition for EVs that will end up benefitting fossil fuels.

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