Energy Traders Taking No News As Good News

Market TalkTuesday, Aug 20 2019
Energy Complex Trading Lower on OPEC news today

Energy traders are taking no news as good news in the US-China trade spat: it was all quiet on the eastern front to start the week, boosting some buying in the energy and equities markets yesterday. Prompt month RBOB and HO contracts settled about 75 points and 2 cents higher yesterday while WTI added over $1.

Recession fears have waned for now on news that banks around the world, specifically Germany which lead the headlines yesterday, are prepared to implement stimulus programs to battle a global slowdown in economic growth. Aside from news arising that other national banks intend to follow suit, investors will be looking to the Federal Reserve’s minutes due tomorrow afternoon, to see if the US will shift its monetary policy as well.

The EIA published a note yesterday that the US overtook Saudi Arabia as the world’s largest petroleum producer in 2018. With a 16% increase in petroleum and a 12% increase in natural gas production in 2018, the US set a new all-time high combined production record. With the world’s largest oil cartel cutting 2019 projected demand and anticipating a 2020 supply glut, production break-evens will likely enter the conversation again if the oil markets are due for global rebalancing.

Yesterday’s report of another drone attack on a Saudi oil and gas field is taking credit for prices leaning to the higher side of unchanged this morning. Damage from the attack, thought to be staged by the Yemeni Houthi rebels, was limited to the plant’s natural gas processing unit and likewise had limited impact on energy prices. Barring surprise headlines, prices will likely wait for tomorrow’s inventory data release by the DOE and the Fed minutes to take a firmer stance on futures prices.

CLICK HERE for a PDF of today's charts

Energy Traders Taking No News As Good News gallery 0

News & Views

View All
Pivotal Week For Price Action
Market TalkWednesday, Mar 27 2024

Week 12 - US DOE Inventory Recap

Pivotal Week For Price Action
Market TalkWednesday, Mar 27 2024

Most Energy Contracts Are Ticking Lower For A 2nd Day After A Trickle Of Selling Picked Up Steam Tuesday

Most energy contracts are ticking lower for a 2nd day after a trickle of selling picked up steam Tuesday. ULSD futures are down a dime from Monday’s highs and RBOB futures are down 7 cents.

Diesel prices continue to look like the weak link in the energy chain, with futures coming within 1 point of their March lows overnight, setting up a test of the December lows around $2.48 if that resistance breaks down. Despite yesterday’s slide, RBOB futures still look bullish on the weekly charts, with a run towards the $3 mark still looking like a strong possibility in the next month or so.

The API reported crude stocks increased by more than 9 million barrels last week, while distillates were up 531,000 and gasoline stocks continued their seasonal decline falling by 4.4 million barrels. The DOE’s weekly report is due out at its normal time this morning.

RIN values have recovered to their highest levels in 2 months around $.59/RIN for D4 and D6 RINs, even though the recovery rally in corn and soybean prices that had helped lift prices off of the 4 year lows set in February has stalled out. Expectations for more biofuel production to be shut in due to weak economics with lower subsidy values seems to be encouraging the tick higher in recent weeks, although prices are still about $1/RIN lower than this time last year.

Reminder that Friday is one of only 3 annual holidays in which the Nymex is completely shut, so no prices will be published, but it’s not a federal holiday in the US so banks will be open.

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

Pivotal Week For Price Action
Market TalkTuesday, Mar 26 2024

Refined Products Seeing Small Losses Of Around A Penny While Crude Oil Contracts Hover Just Above Break Even

Energy futures are taking a breather to start Tuesday’s trading, with refined products seeing small losses of around a penny while crude oil contracts hover just above break even.

No new news on either the Red Sea shipping or Russian Refining attacks this morning, so Cocoa prices seem to be taking over the commodity headlines while energy markets wait on their next big move.

RBOB gasoline futures set a new 6-month high Monday at $2.7711, which leaves the door open on the weekly charts for the spring rally to continue. A run at the $3 mark is certainly possible in the next few weeks before the typical seasonal price peak is set just before the start of driving season.

A container ship lost power and crashed into the Francis Scott Key bridge in Baltimore this morning, causing a devastating collapse. While cargo shipping into the area will no doubt be impacted by this event, fuel supplies are unlikely to see any notable change since the 9 fuel terminals in Baltimore are primarily supplied by Colonial pipeline. Barges from Philadelphia refineries do supplement Baltimore supplies at times, and those vessel flows will be impacted at least until rescue operations are completed and the bridge sections removed from the waterway. That said, since shipping up from the Gulf Coast via Colonial is generally cheaper than shipping an NY Harbor-priced barrel south, the amount of supply disrupted by this event will be minimal.

While we’re still waiting on the official forecasts for the Atlantic Hurricane season, early reports continue to suggest that we could be in for a very busy year due to warm water temperatures and a forming La Nina pattern.

Dallas meanwhile is preparing for a different sort of disruption, with city officials encouraging companies to let employees work from home during the solar eclipse on April 8th as metroplex traffic is expected to surge. While some isolated fuel outages are certainly possible if people start panic buying gasoline they don’t need, there’s no reason to expect any widespread impact from the demand spike.

Today’s interesting read: Why AI requires a staggering amount of electricity and may create supply competition for EVs that will end up benefitting fossil fuels.

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