Energy Markets Getting Pummeled With Diesel Prices Down

Energy markets are getting pummeled this week with diesel prices down 11 cents over the past 2 days, while oil prices reach their lowest levels since Christmas, with pessimism over tariffs and optimism for peace both being sighted for the most recent wave of selling. From a technical standpoint, we’re approaching “rally or else” levels for most NYMEX petroleum contracts as support breaks down suggesting we could see another 10-15 cents of downside in the next week or two unless the bulls step up in the back half of the week.

The biggest story that seems to be impacting energy prices are reports that the U.S. and Ukraine are close to a deal that could be an important stepping stone in the path towards something resembling peace.

Meanwhile, Ukrainian drones attacks are making their best effort to continue hammering Russia’s energy infrastructure with multiple new strikes on refineries and pipelines reported this week. The latest strike on the 240mb/day Tuapse refinery and nearby terminal on the Black Sea was a part of what appears to be one of the largest drone strikes of the war. Despite a ban on gasoline exports largely driven by those refinery attacks, Russia’s energy ministry insists that fuel levels are fine. Meanwhile, the oversupplied Asian markets that are a home for Russian exports certainly don’t seem to mind some of their competition being taken off the board, particularly with numerous Chinese facilities facing bankruptcy this year.

The API estimated small inventory moves last week, with crude oil and diesel inventories declining by 640,000 and 1.1 million barrels respectively, while gasoline stocks ticked higher by around 537,000 barrels. Seasonally we expect to see gasoline stocks continue to draw down as we move through the spring RVP transition, but its certainly possible the DOE will confirm the API’s estimates of a build in gasoline when their report comes out at 9:30 central this morning given the widespread demand impacts of winter storms last week.

P66 reported an upset at its Sweeny TX refinery as they attempted to restart units following a turnaround. The report says that one of its main fractionation towers was flooded during the event. The timeline for the facility to make another attempt at restarting those units was not listed.

RIN values continue to pull back this week after reaching a 15 month high following reports of biofuel producers slashing production in January following the expiration of the BTC. Yesterday the EPA emailed RFS participants letting them know that 2024 data on RIN separation may be incorrect so they’re pulling that data from the EMTS database while corrections are made.

Today’s interesting read: An example of the complex web of issues facing the US renewables industry as the largest refinery in the North works towards SAF production.