Energy Futures Are Taking A Breather Tuesday Morning After A Strong 6-Day Rally That Pushed RBOB To A Fresh 6 Month High

Energy futures are taking a breather Tuesday morning after a strong 6-day rally that pushed RBOB to a fresh 6 month high while WTI and Brent prices both reached their highest levels since early November. For the first time in nearly a week, there were no new reports of attacks on Russian refineries Monday, after the rubber stamp elections ended Sunday.

Despite the Russian refinery attacks that have shut somewhere between 600,000 and 900,000 barrels/day of capacity being the apparent driver of the most recent product rally, crack spreads have only seen a modest rally, and remain well below the average levels we saw over the prior 2 years. The current range around $20-$25/barrel does set up refiners for a solid year of earnings however, with a much stronger forward outlook than just a few months ago.

The big question is whether or not Ukrainian forces can keep up the pace of refining and other energy infrastructure attacks? It’s not out of the realm of possibility that the crippling of complex refineries, who have repair complications due to sanctions, could be a key piece of the puzzle to bring peace to the region, and ultimately be bearish for energy prices, although that seems like an extreme long shot at this point.

Colonial line 1 values have had a strong rally in recent days, from a nickel discount to tariffs to a penny premium. It’s not unusual to see a slight premium at this time of year as shippers work to turn their tanks ahead of the RVP transition, but the sharp turnaround in values after they hovered near record lows just a week ago is noteworthy.

Exxon’s Baytown TX refinery reported a furnace fire that forced the shutdown of a Hydroformer unit Monday. The report said the flaring event lasted just under 4 hours, but it’s not clear if that unit remains offline. Meanwhile, Flint Hills reported its 3rd upset in a week at its Corpus Christi area refinery system, this one at its East facility, which impacted multiple units Monday.

The EIA this morning highlighted the flurry of M&A activity in the energy space last year, which reached its highest level in a decade, no doubt partially due to the realization that the only green Wall-street really cares about has nothing to do with the environment.