ULSD Took A Week To Make A Move It Would Have Easily Made In An Hour 2 Years Ago

Energy markets are starting the week moving modestly lower with losses on either side of a penny/gallon for refined products. For ULSD, this would mark a 6th consecutive drop if prices stay negative today, with a total decline of 13 cents during that stretch, 11 cents last Monday/Tuesday and just 2 cents in the past 4 sessions. Another way to look at this, ULSD took a week to make a move it would have easily made in an hour 2 years ago.

While several analysts are suggesting the stock market may get a short term boost from the failed assassination attempt over the weekend, energy markets may be seeing a very minor reaction in the other direction as a Republican president would be more friendly to the industry, thereby allowing incremental supply to reach the market, which lowers prices and is actually bad in the short term for producers.

Hedge funds had mixed activity last week, adding modest amounts of length (bets on higher prices) in WTI, Brent and RBOB via a combination of new longs and some short covering, while the diesel contracts (ULSD and Gasoil) both saw modest reductions. WTI is seeing the most bets on higher prices from large speculators than we’ve seen all year, although it’s well below historical highs, and ULSD has stayed in net short territory for 6 straight weeks.

Baker Hughes reported a net decline of 1 oil rig and 1 natural gas rig active in the US last week, bringing the totals for both to fresh multi-year lows.

Total’s 200mb/day Pt Arthur TX refinery was taken offline Saturday due to a loss of steam, and the company expects flaring to be ongoing throughout the week as they attempt to bring the facility back online. There have not been any other refinery filings to the TCEQ the past 3-4 days, suggesting the restarts after Beryl moved through a week ago are progressing well.

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