Refined Futures Bounce Back Despite Lower Spot Prices And Global Uncertainty

Refined product futures are moving higher Monday, wiping out a little over half of the nickel losses from Friday’s session. Since spot markets weren’t assessed Friday, most wholesale prices are still set to move lower from their last posting on Christmas eve, which will certainly confuse a few people this evening.

Sell the rumor buy the news? The headline reasoning for the recovery bounce is that a peace deal for Ukraine is unlikely, despite progress being announced in meetings over the weekend.

Ukraine’s drones hit the 170mb/day Syzran oil refinery in Russia’s Samara region over the weekend. That facility was also struck in early December, with reports that it was forced to suspend operations following that strike. Russia announced it has extended is ban on gasoline exports through the end of February – despite claims that only 3% of its refinery output has been damaged by Ukraine’s attacks.

The CFTC is almost caught up with their weekly Commitments of Traders report, with an update this Wednesday 12/31 expected to get the data back on track for its normal schedule following the U.S. Government shutdown.

The ICE data that has been published uninterrupted showed a huge increase in speculative bets on higher Brent crude oil prices after they approached a 5-year low the week prior. Roughly 2/3 of the increase in net length came from short covering after the record-setting volume of speculative bets on lower prices started heading for the exits.

The weekly sentiment by money managers was the exact opposite for gasoil contracts (Europe’s ULSD equivalent) with 20% of all long positions liquidated during the week, cutting the net length in half.

Baker Hughes reported an increase of 3 oil rigs active in the U.S. last week, while the natural gas rig count held steady for a 2nd straight week. For the year, the U.S. oil rig count is down 74 rigs, (15%) while the natural gas rig count is up by 25 (25%). That shift in focus from oil to natural gas looks like it will continue into the new year with oil prices hovering near 5 year lows, while the natural gas industry sees fresh demand from new LNG export facilities and strong electricity demand domestically thanks in large part to the rapid growth of data centers. An RBN note last week highlighted how the National Petroleum Council is working to coordinate efforts between the electric and natural gas industries to avoid a potential grid crisis. The NPC’s full report can be found here.

The Primary Vision count of active Fracking crews fell by 6 on the week, reaching its lowest level since March of 2021 at a total of 154.

Exxon reported an upset at its 630mb/day Beaumont TX refinery Sunday with brief flaring in a hydrodesulfurization unit. That upset lasted just a little over an hour and doesn’t appear to have disrupted other units.

Marathon reported unplanned flaring at the Carson section of its 360mb/day LA-area refining complex Friday morning. That facility is undergoing 2 weeks of maintenance after multiple upsets earlier in December.