Gasoline Prices Are Down About A Nickel This Morning After Reaching A Fresh Record High Overnight

Gasoline prices are down about a nickel this morning after reaching a fresh record high overnight, while the rest of the complex is trading close to unchanged to start the week.  

The EPA released its final volume mandates for the RFS from 2020-2022 Friday, which raised the ethanol mandate for this year beyond previous estimates, and helped RIN prices continue their rally. The ruling also defined a pathway for bio intermediates, which are biofuels that require processing at multiple facilities, to qualify for the RFS program, which could add to the supply of both advanced biofuel and cellulosic fuels. In addition, the agency also denied 69 petitions for small refinery hardship waivers to the RFS. 

Money managers added to their net length across the energy complex last week, with new long positions and some heavy short covering both contributing to the increase. While the large speculators seem to be getting more comfortable betting on higher prices, the positions are still small in comparison to previous years, and open interest remains near multi-year lows, suggesting the ongoing volatility is still too hot for some to handle. 

Baker Hughes reported no net change in the count of rigs drilling for oil and gas in the US last week. A Rystad energy report last week forecast that the Permian basin will outpace the rest of the world in production growth in the coming year, even though the rig count remains well below pre-COVID levels. 

The US has made a small concession on Venezuelan sanctions, allowing 2 European companies to take delivery of previously off-limits oil, so long as that oil is delivered in Europe and not sold in the open market. While this is a big step in terms of the US state department acknowledging the global shortage of energy supplies, the actual volumes in play so far are quite small and shouldn’t impact prices much.

Today’s interesting read, from the Financial Times: The end of the term ESG. 

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