Refined Product Futures Are Seeing Some Modest Selling To Start The Abbreviated Trading Session Monday

Refined product futures are seeing some modest selling to start the abbreviated trading session Monday, with many in the industry taking President’s Day off since cash markets in the US aren’t being assessed.

WTI is trading slightly higher despite the dip in products and Brent crude prices would mark a 10th move higher in the past 11 trading sessions if it can hang on to those gains. That said, there won’t be a settlement for NYMEX contracts today due to the holiday, so it won’t officially count either way.

The violence around the Red Sea shows no signs of slowing after the US naval forces carried out new attacks in Yemen over the weekend, and the Houthi’s proved they aren’t discerning at all in their targets after hitting a cargo vessel with missiles that forced its Lebanese crew to abandon ship.

Money managers jumped back on the energy bandwagon last week, adding to speculative net length across all of the major contracts via a combination of new length added and short covering. While the total length held by the big funds is still unimpressive by historical standards, there is more money being bet on higher Brent crude oil prices now than at any time in the past year. 

A Reuters article published Friday suggested the White House was preparing to announce a change in scientific modeling that would show the detriments of using ethanol as a renewable fuel, which would prohibit most producers from qualifying for SAF production credits. SAF production has been seen as the next option for ethanol producers to finally work around the fuel’s blend wall, but if they can’t show a 50% reduction in GHG emissions they won’t be able to get the $1.25/gallon tax credit which (on top of RIN values) is the only way to make those fuels economically viable. 

RIN values meanwhile continue to plummet, approaching a 4 year low around $.45/RIN for both D4 and D6 values as the flood of new renewable diesel production continues to far-outpace the EPA’s mandated demand. Don’t be surprised if promises to change that mandate become one of many hot button items in the presidential campaigns this year.   

Speaking of which, a NY Times article Saturday suggested the White House is preparing to walk-back its proposals to cut tail pipe emissions by forcing EV usage in what is seen as an election year concession after automakers called the plans “neither reasonable nor achievable”.   

Baker Hughes reported a decline of 2 oil rigs drilling in the US while the natural gas rig count held steady.  

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