Refined Product Futures Bouncing This Morning, With Prompt-Month ULSD Leading The Way

Refined product futures are bouncing this morning with the prompt-month ULSD contract leading the way higher. The April HO contract is outpacing its May counterpart as a late-season nor’easter pushes through the northern Atlantic seaboard, boosting heating oil demand in the region. Crude oil benchmarks are lagging behind this morning, with WTI and Brent oil taking .7-1% haircuts to start the day.

The collapse of Silicon Valley and Signature banks are taking credit for the continued weakness in oil futures, which are on pace to have the worst weekly loss of the year. While the equity markets have seemingly shrugged off the proto-banking crisis, global oil prices have been less resilient, breaking from their correlation and extending last week’s losses.

The EIA published an uplifting, if a bit ambitious, note this morning estimating the CO2 emissions caused by energy consumption will drop 25% by the end of the decade. The Administration cites higher adoption of EVs, energy efficiency increases, and renewable fuel sources as the main drivers for the reduction of America’s carbon footprint. Extended analysis on the subject, along with a suspiciously positive and quite lengthy discourse on the Inflation Reduction Act’s impact on fossil fuel consumption, can be found in the EIA’s Annual Energy Outlook, published this morning.

Gasoline and diesel futures have backed away from the technical cliff they considered base jumping from earlier this week, suggesting traders aren’t quite ready to push prices much lower since there is in fact a war still happening, and one of the belligerents is (was?) a global energy titan. Convergence of the 200-week moving average and the December 2021 low is serving as the last bastion of support on US crude oil charts, however. If this ~$65 level is broken, the path to much lower prices seems wide open.

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