Energy Futures Seeing Trading Gains While Crude Oil And Diesel Decline

Energy futures are seeing modest gains to start Friday’s trading, but crude oil and diesel prices are still on pace for a 3rd straight week of declines, despite Monday’s round of tariff-induced panic buying. RBOB futures are bucking the downward trend in modest fashion, as gasoline traders appear to be gearing up for the annual rally in gasoline prices as refineries begin transitioning to summer grades just in time for driving demand to pick back up.

While the tariff war with Mexico and Canada has been put on hold until March, Chinese tariffs are very much active, and causing a scramble amongst US exporters who already had ships in route when the announcements were made. It’s likely that we’ll see waivers issued to allow those shipments to pass (just as we saw with Russian and Iranian ships stuck in Chinese ports earlier this year) but the longer term implications on a drop in global demand if the tariffs slow economic activity continue to weigh on many minds.

The BLS reported another steady month for payroll activity in the U.S., with an estimated 143,000 jobs added during the month. That figure was slightly below several published expectations, but November and December’s estimates were revised higher by 100,000 jobs, adding to the story of resilience in the labor market. The headline unemployment rate dipped to 4% in January while the less manipulated “U-6” unemployment rate held steady for the month at 7.5%

San Francisco spot markets continued their basis rally Thursday with CARBOB differentials hitting a 50 cent/gallon premium in the wake of the weekend fire at PBF’s Martinez refinery. LA spot values did see a pause in their gains after steadily rallying for most of the past 3 weeks, with values now hovering around a 46 cent premium.

A Reuters story this week highlighted how Cyprus is using child labor to teach kids about the benefits of recycling used cooking oil to make diesel fuel. While the story offers an interesting solution to the logistical challenge of collecting small amounts of waste oil from homes, they somehow neglected an update on the new CFPC ruling that will (probably) exclude used cooking oil imports from qualifying for the incentives needed to make those conversions economically viable.