December Trading Opens With Gains As Drone Strikes And Sanctions Hit Refineries

December trading is starting with modest gains for energy contracts, with ULSD futures once again leading the move higher by around 3 cents after trading up more than 6 cents overnight.

European refinery woes continue to drive some of the strength with 2 more Russian refineries hit by Ukraine’s drones over the weekend, and Serbia was forced to idle its only facility as it awaits a reprieve from sanctions that have cut off its crude supply.

A naval drone attack also shuttered operations at the Caspian Pipeline Consortium that delivers over 1 million barrels/day of oil from Kazakhstan to the Black Sea.

An ironic loss of cooling at a data center near Chicago caused the CME group to halt trading in numerous contracts for 11 hours on Friday, which went largely unnoticed in the energy arena as most traders had the day off and spot markets weren’t being assessed.

Ethanol RINs (D6) rallied to a 3 month high as the market awaits a final ruling from the EPA on 2026 targets, new import rules and reallocation of small refinery exempted RINs. Renewable fuel producers are also hoping the EPA will issue guidance to allow year-round sales of E15, but that decision isn’t facing a deadline like the Renewable Fuel Standard updates.

The CFTC is still working through its data backlog caused by the government shutdown and will need until mid-January to get caught up on its weekly reports. The ICE data shows that money managers were bailing out of long positions in Brent crude and gasoil contracts last week while a healthy amount of new speculative money came in on the short side betting on lower prices ahead. The short interest held by large speculators in Brent is at the 2nd highest level in history, leaving those funds susceptible to a short covering rally like we saw in October when those positions reached their record high.

A Federal Court issued a final ruling authorizing the sale of Citgo to Elliott Management’s Amber Energy, which will close next year unless a flurry of protests are able to stop the process. If Amber energy is able to close the deal, it will be bad news for those hoping to maintain the status quo as the notorious refinery activist has promised a shakeup of the company’s operations and employee base while keeping the Citgo brand.

Baker Hughes reported a decrease of 12 oil rigs last week, pushing the U.S. total to a fresh 4 year low of 407 active oil rigs. The natural gas rig count ticked up by 3

Marathon reported unplanned flaring at its Los Angeles-area refinery over the weekend due to turnaround activity.

Delek’s Big Spring TX refinery reported a fire in an asphalt unit, with no injuries caused by that event.