Mid-April Price Breakout Looking Like A Trap For The Bulls

Gasoline futures are leading the energy complex lower this morning, pulling values back into the trading range that held prices for nearly a month, which makes the mid-April price breakout look like a trap for the bulls. Surging COVID case counts in India and other countries around the globe continue to get credit for any pullbacks, as those lockdowns could well offset the positive impacts on demand as the U.S. continues to reopen.

Ethanol prices and the RINs they come with continue to push near record high levels, thanks in large part to a surge in grain prices last week. That surge in ethanol pricing while gasoline prices are stumbling dropped the spread between the two fuel components to a six month low.  

Bio-mass-based diesels and their RINs saw a similar surge on the back of soybean and soybean oil prices, and yet more stories that show the feedstocks to produce those fuels continue to be in short supply, raising questions about how all the new production facilities slated to come online in the next 18 months are planning to operate.

Baker Hughes reported that the total U.S. oil rig count dropped by one last week, as the slow and steady recovery in production now that prices have returned to profitable levels took a pause for the week. 

Money managers continue to have mixed feelings on petroleum prices, making small increased to their net length in RBOB, HO and Brent positions last week, while reducing those in WTI and Gasoil.  

The refinery formerly known as Hovensa, which was formerly known to have an outsized impact on refined product futures given its location and status as a key importer to the U.S., continues to make news for all the wrong reasons. Another emissions event caused schools and a COVID vaccine site near the plant to close on Friday, which has already caught the eye of regulators and could be another nail in that facility’s coffin.

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