July Purgatory Trading Pattern Continues

Market TalkWednesday, Jul 29 2020
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The July purgatory trading pattern for energy markets continues this week as prices struggle to break out of their neutral pattern. WTI has landed on a $41 price for the past seven trading sessions, while Brent has ended the day with a $43 for the past five sessions. 

If you are getting bored with energy prices going nowhere, take a look at the Gold market that has rallied to a record high as investors seek a safe haven in a money-printing-gone-wild environment with extreme levels of economic uncertainty.

The API was reported to show a decline in U.S. oil inventories of 6.8 million barrels last week, that immediately put a bid under WTI prices that’s lasted through the overnight session. Refined product inventories had slight builds (one million barrels for gasoline and 187k barrels for diesel) that are keeping the optimism in check. The EIA’s weekly report is due out at 9:30 Central Time.

The Fed’s Open Market Committee (FOMC) has another meeting today, and will release their statement at 1 p.m. Central. The CME’s Fedwatch tool shows that not only is there no chance of an interest rate change expected today, there’s a zero percent probability of a change in the next eight months priced into the market currently. That means the market reaction to the statement should be minimal today, and that the press conference following the official statement may have more influence on prices.

The record setting Atlantic hurricane season continues. The national hurricane center is predicting a new tropical storm (Isaias) will form in the next day and is heading towards Florida. The current forecasts suggest it will stay at “only” tropical storm strength, but as we just saw with Hanna – and as has been a pattern the past few years – don’t be surprised to see additional strengthening beyond what the current models show before it reaches the coast. On its current path, the storm does not appear to be a threat to any refineries, but the port of Tampa may need to close as it  passes.    

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TACenergy MarketTalkUpdate 072920

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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.