Gasoline Prices Continue To March To Fresh Record Highs This Week

Market TalkFriday, Jun 3 2022
Pivotal Week For Price Action

Gasoline prices continue to march to fresh record highs this week as the world got a harsh reminder Thursday that OPEC can’t replace Russian exports, and US inventories continue to slide. RBOB gasoline futures smashed their previous record in Thursday’s session, then broke it again by 3 cents overnight, with essentially nothing on the charts standing in the way of an extended move higher.  

While diesel prices are still well-below the chaotic records set back in March and April, they are now within striking distance of the $4.40 chart gap, with little technically standing in the way of a push to that next layer of resistance.  If diesel prices do move into that range however, there’s a potential head and shoulders forming on the charts with March’s rally to $4.67 creating the left shoulder and April’s spike north of $5.85 as the head. That pattern could ultimately mark the end of the bull market in ULSD, but it still could take months before that plays out, IF it happens at all.

OPEC announced it would accelerate its output restoration to pre-COVID levels, which did bring about a brief round of selling, only to see those losses turn to gains when multiple reports reminded people that this was in no way a replacement of the Russian barrels that are lost or redirected by sanctions. 

RIN prices saw a big rally Thursday following another rumor report that the EPA would increase the 2021 renewable volume mandates, rather than easing them to help lower fuel prices as had been rumored over the past few weeks.  The agency is under a court order to release its long overdue blending requirements for 2020-2022 later today.  

The DOE’s weekly report showed a large draw in crude oil inventories despite the ongoing SPR release, and refiners struggling to keep up with the product demand both domestically and abroad. Refinery hiccups continue to hamper the efforts, with the system stretched tighter than it’s been in decades with so much capacity taken offline in the past 2 years. The one notable exception in refinery activity is seen in PADD 1 where the plants that had been knocking on death’s door for years have now been able to increase run rates for 5 straight weeks to their highest levels since the start of the pandemic. 

Tropical Storm Alex is expected to be named later today, but fortunately is steering far south of the Gulf Coast refining network as it heads towards Florida. The other good news with this storm is that it’s moving forward quickly which should minimize the impacts on land.

The May payroll report showed an estimated increase of 390,000 jobs in the US last month, while the headline unemployment rate held steady at 3.6% and the U-6 rate ticked up to 7.1%.  

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

Market Talk Update 6.03.22

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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.