Energy Futures Down 17-23% in Early Morning Trading

A week ago today, petroleum prices were reaching multi-month highs of $2.3447 for RBOB, $2.3375 for ULSD and $72.28 for WTI. This morning those contracts traded down to $1.8850 for RBOB, $1.9373 for ULSD and $55.12 for WTI, marking 17-23% drops and the lowest levels we’ve seen since 2021 for the May contracts. Those weekly drops put the selling in the top 2 worst weeks for RBOB and WTI on record, while for ULSD it “only” makes the top 5 thanks to the chaotic swings of 2022.

A week ago the probability of the FED cutting rates at their May meeting was just 10%, and today it’s 51% according to the CME’s Fedwatch tool even though fears of inflationary pressure from the rapidly escalating trade wars are being cited by FOMC officials. Equity futures continue to point sharply lower this morning, while a sell-off in the U.S. Dollar and Treasuries is also adding to the fear trade.

The large and rapid decline in gasoline prices is great news for retailers who are seeing a margin surge as average retail prices increased last week, and for the most part street prices haven’t started chasing wholesale levels lower. The DOE has announced two changes in their reporting schedules this week, the first of which is delaying their weekly retail pricing report to Tuesday instead of Monday going forward, and the 2nd is a temporary delay in the monthly Short Term Energy Outlook by 2 days to give their analysts time to assess the tariff chaos. Originally the STEO was scheduled to be released yesterday but has been delayed until tomorrow.

The API reported declines in U.S. oil and diesel inventories of 1.05 and 1.84 million barrels respectively, while gasoline stocks were estimated to have a small increase of 207,000 barrels. So far, the DOE’s weekly status report is still supposed to come out at its normal time, despite the delays in the agency’s other reports this week.

Reuters rumor report on Tuesday suggested that Oil and biofuel lobbyists had agreed on a biomass diesel target of 5.25 billion gallons for 2026 in a proposal made to the EPA, which is roughly 10% lower than what the biofuel groups had previously been asking for, but still a major increase from this year’s target of 3.35 billion gallons. The total renewable target in the report was said to be 25 billion gallons of renewables compared to 22.3 billion gallons in 2025. RIN values were little changed on the day as those targets appear to be in line with recent expectations for a much higher biomass diesel (Biodiesel, RD and SAF) that’s helped push values to 18 month highs.

A new executive order targeting state energy laws has carbon credit markets moving lower Wednesday with both CCA and LCFS values under pressure on the chance that the Feds will try to make Cap & Trade and LCFS programs illegal.