2025 Is Off and Running With Energy and Equity Markets To Start The First Day Of Trading

2025 is off and running with energy and equity markets both showing a healthy bid in the first day of trading. Gasoline futures are leading the energy complex higher so far with 3 cent gains, while ULSD is up a little over 2 cents and crude contracts are up around $1/gallon.

A big winter storm and 2 waves of cold air are going to keep things interesting in the first week of the year, with some markets in the south at risk of a damaging freeze. Refinery row across the US Gulf Coast is expected to dip below 32 degrees on Monday, but since temps aren’t expected to stay there for long, it seems unlikely we’ll see anything resembling the chaos from Winter Storm Uri back in 2021.

The strength in diesel prices last week pushed the backwardation in ULSD futures to the highest level since March, and ending nearly 8 months of consistent contango for the prompt month spread. While the strength in calendar spreads is noteworthy, the gains further forward on the curve are much less noticeable, and are barely a blip on the radar compared to what we saw in 2022 and 2023, suggesting this is simply a short term reaction to the cold weather and Russian Nat Gas uncertainty, rather than a sign of a new structural shortage.

From a chart perspective, the recent rally in distillates does have ULSD showing a tentative breakout on the weekly and monthly charts from the downward sloping trendline that’s contained any price rallies since values topped out in September 2023 at $3.50/gallon. If the break above $2.30 can hold on, there’s clear sailing on the charts to the October high of $2.4183 and after that June’s high print of $2.6595 becomes the next simple target.

The early gains in refined products this morning are shrugging off the inventory builds reported by the API on Tuesday afternoon that pretty much no-one was around to see. The industry group estimated diesel stocks built by more than 5 million barrels over the Christmas holiday – which isn’t unusual since many industrial users shut operations for an extended time – while gasoline stocks built by more than 2 million barrels.

The DOE’s weekly status report is due at 11am eastern today. The report should be released on its normal Wednesday @ 10:30am eastern schedule next week (Jan 8th) since the Federal holiday announced for Jimmy Carter’s funeral on the 9th will be after the report. The week of January 20th the report will be delayed a day for the MLK Jr. Day holiday and will be released on Thursday the 23rd at 11am.

The CME group has stated that NYMEX energy contracts will have a normal day on Thursday January 9th, and so far none of the spot or rack pricing groups have planned to not publish during the quasi-holiday, so it should be a normal day for energy markets even while stocks and several other trading platforms will either be shut down or close early for the day.

Total reported an upset at its Port Arthur refinery that took place last Monday, 2 days after tornadoes swept through the area. It’s unclear if the events were related, or if the upset in a cogen unit led to other units having to slow their operations.

A fire broke out at Valero’s Three Rivers TX refinery on New Years day, with no injuries reported after it was extinguished. The cause and impacts of the fire are unknown at this point, but it comes just over a week after the company reported unplanned flaring at the facility, and just 5 days after the company reported a fire at its Port Arthur TX refinery. Since Pt Arthur is a key origin point on the Colonial pipeline, any lasting impacts to those facilities has much higher potential of impacting regional basis values than an issue at three rivers, which is a smaller 100mb/day facility that supplies South Texas markets along with San Antonio and Austin.