Gas Prices Survive Trip To Low End Of Trading Range

Market TalkThursday, Apr 8 2021
Pivotal Week For Price Action

The back and forth pattern continues after gasoline prices survived a trip to the low end of their trading range Wednesday. Large builds in refined products and a pullback in demand sparked a wave of selling following yesterday’s DOE report, but as has been the case for the past three weeks, buyers stepped in as prices approached chart support levels and ended the trading session on a strong note. 

It’s a mixed bag so far today with crude and diesel prices showing small losses, while gasoline has small gains. Reports of an unplanned shutdown of a refinery in Louisiana this morning seem to be helping RBOB prices go from small losses to modest gains on the day, and helping push gasoline time and crack spreads higher just as you’d expect when there’s a supply disruption. No details yet on the cause or duration of that shutdown.

Want a reason why yesterday’s gasoline inventory build isn’t something refiners need to worry about? Take a look at the gasoline import chart below, which shows an increase of 4.7 million barrels in total last week, which suggests the four million barrels build in total inventories isn’t a trend that will continue.

More bad news for the beleaguered refinery formerly known as Hovensa. Several executives are reportedly stepping down after the plant was forced to shut last week, and lost an expansion permit previously granted by the EPA. That may be good news for other refiners around the Atlantic basin if it’s a sign that the plant won’t operate, but could also just be a sign that the company is in the process of finding more capable operators.

The new U.S. corporate tax overhaul proposed Wednesday will (not surprisingly) look to increase incentives for renewable energy producers, and pay for it by removing incentives for energy produced from fossil fuels.  With

Meanwhile, the ports of Vancouver, Seattle and Tacoma laid out their plan to jump on the zero emission by 2050 bandwagon, focusing specifically on pushing ships to run on electricity while docked rather than idling their diesel engines to produce power. It does not appear that plan has detailed where that extra electricity will come from, or how it will be emissions free.

Click here to download a PDF of today's TACenergy Market Talk, including all charts from the DOE weekly status report.

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Market TalkFriday, Jun 2 2023

Energy Prices Up Over 2% Across The Board This Morning

Refined product futures traded in an 8-10 cent range yesterday with prompt heating oil settling up ~6 cents and RBOB ending up about flat. Oil prices clawed back some of the losses taken in the first two full trading days of the week, putting the price per barrel for US crude back over the $70 mark. Prices are up just over 2% across the board this morning, signifying confidence after the Senate passed the bipartisan debt ceiling bill last night.

The EIA reported crude oil inventories up 4.5 million barrels last week, aided by above-average imports, weakened demand, and a sizeable increase to their adjustment factor. The Strategic Petroleum Reserve continues to release weekly through June and the 355 million barrels remaining in the SPR is now at a low not seen since September 1983. Exports increased again on the week and continue to run well above last year’s record-setting levels through the front half of the year. Refinery runs and utilization rates have increased to their highest points this year, both sitting just above year-ago rates.

Diesel stocks continue to hover around the low end of the 5-year range set in 2022, reporting a build of about half of what yesterday’s API data showed. Most PADDs saw modest increases last week but all are sitting far below average levels. Distillate imports show 3 weeks of growth trending along the seasonal average line, while 3.7 million barrels leaving the US last week made it the largest increase in exports for the year. Gasoline inventories reported a small decline on the week, also being affected by the largest jump in exports this year, leaving it under the 5-year range for the 11th consecutive week. Demand for both products dwindled last week; however, gas is still comfortably above average despite the drop.

The sentiment surrounding OPEC+’s upcoming meeting is they’re not likely to extend oil supply cuts, despite prices falling early in the week. OPEC+ is responsible for a significant portion of global crude oil production and its policy decisions can have a major impact on prices. Some members of OPEC+ have voluntarily cut production since April due to a waning economic outlook, but the group is not expected to take further action next week.

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

Pivotal Week For Price Action
Market TalkThursday, Jun 1 2023

Prices Are Mixed This Morning As The Potential Halt In U.S. Interest Rate Hikes

Bearish headlines pushed refined products and crude futures down again yesterday. Prompt RBOB closed the month at $2.5599 and HO at $2.2596 with WTI dropping another $1.37 to $68.09 and Brent losing 88 cents. Prices are mixed this morning as the potential halt in U.S. interest rate hikes and the House passing of the US debt ceiling bill balanced the impact of rising inventories and mixed demand signals from China.

The American Petroleum Institute reported crude builds of 5.2 million barrels countering expectations of a draw. Likewise, refined product inventories missed expectations and were also reported to be up last week with gasoline adding 1.891 million barrels and diesel stocks rising 1.849 million barrels. The market briefly attempted a push higher but ultimately settled with losses following the reported supply increases implying weaker than anticipated demand. The EIA will publish its report at 10am this morning.

LyondellBasell announced plans yesterday to delay closing of their Houston refinery, originally scheduled to shut operations by the end of this year, through Q1 2025. The company “remains committed to ceasing operation of its oil refining business” but the 289,000 b/d facility remaining online longer than expected will likely have market watchers adjusting this capacity back into their balance estimates.

Side note: there is still an ongoing war between Russia and Ukraine. Two oil refineries located east of Russia's major oil export terminals were targeted by drone attacks. The Afipsky refinery’s 37,000 b/d crude distillation unit was struck yesterday, igniting a massive fire that was later extinguished while the other facility avoided any damage. The attacks are part of a series of intensified drone strikes on Russian oil pipelines. Refineries in Russia have been frequently targeted by drones since the start of the military operation in Ukraine in February 2022.

Pivotal Week For Price Action
Market TalkThursday, Jun 1 2023

Week 22 - US DOE Inventory Recap