Energy Prices Lack Direction in Tuesday's Session, Southwest Markets Remain Tight, Refineries Report Q1 Earnings

Energy prices are seeing another round of lackluster selling to start Tuesday’s trading session as the search for direction continues after a modest Monday bounce. RBOB gasoline prices continue to hold above their weekly trend-line, which could eventually spark another run at $3, while ULSD is still hovering around the $2.50 mark, and is looking bearish on the charts. 

Corpus Christi experienced widespread power outages over the weekend that knocked at least 3 refineries off-line according to numerous reports to the TCEQ Monday. Damage assessments and restart efforts are underway, but there was an immediate tightening of supply in the San Antonio, Austin, and DFW corridor that is largely supplied by the Corpus refineries. While a long-term disruption is unlikely given that facilities were already bringing units back online Monday, it certainly doesn’t help alleviate the supply concerns in other parts of the state.    

Markets across the US southwest continue to show extremely tight supplies with $1/gallon premiums compared to spots still the norm in a handful of markets. The market for pipeline space is indicating that supply will start to ease at some point in May, assuming the two local refineries return from maintenance in that window, with June premiums offered 40 cents/gallon lower than May bids. 

Refiners will start reporting their Q1 earnings later this week. Crack spreads were healthy for that time of year but have since slumped to their lowest levels since the war broke out, which will cloud the future outlook for many. A Reuters article highlights how Russia’s supply loopholes are creating big opportunities for Indian and Chinese refiners, and those in the Middle East who can buy cheap Russian barrels for domestic use, and export their own products at higher prices, all of which is contributing to lower margins globally. 

The debate over who will buy TA continues with SEC filings detailing the arguments on both sides. 

The Dallas Fed’s Texas manufacturing survey was flat in April after increasing modestly in May. The report noted that “Perceptions of broader business conditions worsened notably in April” while new orders slumped for an 11th straight month. 

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