Gasoline And Oil Inventories Both Increased By More Than 4 Million Barrels Last Week According To The API

Market TalkWed, Jun 05, 2024
Gasoline And Oil Inventories Both Increased By More Than 4 Million Barrels Last Week According To The API

It’s a mixed start for energy markets Wednesday as the search for a bottom continues after prices reached multi-month lows Tuesday. RBOB gasoline futures are ticking modestly lower, while ULSD and WTI are both clinging to small gains in the early going after staging a modest bounce Tuesday afternoon.

Gasoline and oil inventories both increased by more than 4 million barrels last week according to the API, while distillate stocks grew by nearly 2 million barrels. There’s plenty of anecdotal evidence of the typical holiday hangover hitting demand and driving inventory builds across the US last week, and we’ll get the DOE’s estimate at its normal time this morning. The big question in the weeks ahead is whether or not US refiners are able and willing to continue to run at multi-year high rates, even when the market is signaling it can’t handle the extra supply. One major difference this year vs the past few is that diesel prices have flipped into contango, so refiners and shippers are being paid to sit on inventories, which will likely keep stocks increasing through the summer unless refiners cut runs.

The violence around Israel is ramping up this week, with a new front in the North and new attacks from Iraq via Iran’s proxy fighters suggesting there’s no end in sight to the related shipping disruptions around the Red Sea will be coming anytime soon. An EIA note this morning highlighted the extra fuel being consumed in the shipping industry due to vessels taking the long way around to avoid the violence, which makes you wonder how much worse the diesel outlook would be this year without that extra demand.

Meanwhile, we’ve seen a lull in the Ukrainian attacks on Russian refineries. Read here for a good recap on that situation and its (lack of) impact on global supplies.

Marathon was forced to shut down an FCC unit at its El Paso refinery Monday following an upset. The timing of that shutdown will cause concerns for El Paso’s boutique 7.0lb RVP summer gasoline that few refiners produce, and may require a waiver from the EPA (like we saw last summer) if that unit doesn’t come back online quickly. .

Meanwhile, the P66 Borger refinery reported multiple unit upsets yesterday after the plant was attempting to restart units last week following maintenance. The event was short lived, so perhaps may not impact production, but since 4 different units were impacted and a cause is unknown, it’s too soon to say.

More trouble in LALA land? California’s CCA credits dropped to a 1 year low this week. Buyer’s remorse? We’ve seen 4 days of steady selling after the delayed quarterly auction for CCA credits sold out last week north of $37/credit, but those values are already down to $35.

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Gasoline And Oil Inventories Both Increased By More Than 4 Million Barrels Last Week According To The API