Strong Rally In Energy Prices Runs Out Of Steam
A strong 2-day rally in energy prices ran out of steam Thursday afternoon – despite some bullish headline numbers from the DOE – and prices have slipped back into the red overnight.
There doesn't appear to be any smoking-gun headlines to explain the sudden reversal, so it seems that there simply wasn’t enough momentum by the bulls to push prices through the top end of their recent trading range, leaving us stuck in a choppy sideways pattern for a while longer.
The DOE weekly report showed inventory declines across the board, and total petroleum demand holding at the top end of its seasonal range, although the weekly estimate for gasoline consumption dropped sharply. Crude oil production pulled back slightly from its all-time high set last week, and refinery runs ticked lower due to a handful of unplanned maintenance events, and as the fall gasoline RVP transition moves into full swing.
Reports are circulating that the EPA is working to revoke California’s ability to regulate automobile emissions beyond federal standards. Until a final ruling is made the details of this plan – and which of California’s numerous rules it may affect – are scarce, and it seems likely that any ruling may take years of court battles to enforce.
Pipelines for everyone! It’s not just crude oil and refined products that are seeing new pipeline options relieve supply bottlenecks in the Permian basin. The EIA is reporting that W. Texas natural gas prices – which had dipped below zero on occasion in recent years – are strengthening due to new takeaway capacity.