Petroleum Product Inventories Boosted Futures

An across-the-board draw in petroleum product inventories boosted futures prices yesterday after the big three (gasoline, diesel, and WTI crude) tried to start the day with modest losses. Gas and diesel saw the largest drawdowns in stocks at 5.4 million barrels and 3.9 million barrels, respectively. Likewise, the two refined product contracts lead the complex higher, each posting a ~1.3% gain on the day.

While the combination of growing adoption of renewable fuel and collective abandonment of coal usage is expected to cut emissions over the next 30 years, the EIA still anticipates a 5% increase in the world’s CO2 footprint through 2050.  

RIN prices are rallying this week after completely recovering from last month’s selloff surrounding the fake(?) email containing biofuel blending targets. Both ethanol (D6) and biodiesel (D4) credits added 5 ½ cents yesterday, bringing their price to $1.41 and $1.67, respectively.

Diesel prices in the Midwest have hit fresh 16-month lows against the New York Harbor Heating Oil contract. While it is common to see prices in the region slope off with the cooling weather, witnessing it happen this early, and in the middle of harvest season, is uncommon. Seasonally high days of supply seem to be the culprit for the dropping prices in the Heartland.

The European crude oil benchmark hit fresh multi-year highs in overnight trading before pulling back with the rest of petroleum futures early this morning. Whether this morning’s action is profit taking, ‘Reversal Thursday’, or the beginning of the sizable pullback some are anticipating is yet to be seen. What has been seen, over the past couple weeks, is early morning selling reversed mid-day as some traders find a reason to continue buying.

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