Money Managers Reduced Their Bets On Higher Prices On All Of The “Big Four” Energy Futures Contracts, Except WTI

It’s a mixed bag for energy prices this morning as Brent crude oil futures are trading modestly lower while HO leads refined products and WTI higher with ~3% gains to start the morning. Poor economic data from China is taking credit for the drop in European oil prices as the world’s second largest economy struggles to recover following pandemic lockdowns.

Money managers reduced their bets on higher prices on all of the “big four” energy futures contracts, except WTI. The addition of net length in the American crude oil benchmark seems to be coming from the trimming of short positions as traders get out of the way of what looks to be a runaway train. Despite Chinese demand concerns, oil prices have rallied since mid-August.

The EIA published an article this morning highlighting the rapid growth of renewable diesel in recent years. At the start of this year, RD production reached 3 billion gallons, surpassing U.S. biodiesel production capacity for the first time in history. As a reminder, renewable diesel is chemically equivalent to petroleum diesel and nearly identical in its performance characteristics and can be used in existing diesel engines without any modifications.

The National Hurricane Center is currently tracking two storms that are likely to develop into cyclones over the next week. The closer storm looks to be pointed at the Lesser Antilles while the one just coming off the west coast of Africa looks to be headed a little further north. While they are still a ways away from US energy infrastructure, there are hardly any atmospheric conditions hampering their development.

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