Refined Products Are Ticking Lower By A Penny To Start Friday’s Session

Refined products are ticking lower by a penny to start Friday’s session after a big Thursday rally once prices broke out of their sideways trading range. 

ULSD led the charge Thursday, closing the gap left behind at the end of November when the DEC futures contract expired. The diesel contract is currently holding above its 200-day moving average, which gives another technical reason for prices to make a run at the $3 mark in the coming weeks. RBOB futures also reached their highest level since the end of November, and although some short term indicators are flashing overbought signals, suggesting a corrective pullback is due, longer term the charts are set up for a spring rally that should at least threaten the $2.50 mark in the coming weeks. 

The ongoing attacks in the Red Sea continue to be a convenient option for headline writers anytime the market rallies, which seems to ignore the fact that Saudi Arabia is still moving oil and products through the region, and Qatar said that diverting LNG carriers may delay some shipments but would not have a major impact on its ability to supply customers. 

Adding to the fervor Thursday were reports that one of Russia’s largest refineries was on fire after Ukrainian drone attacks, even though Russian exports are no longer heading towards Europe or the US, so any impacts on supplies will be indirect at most.  

The sell-off continues for Mid-continent product differentials, with ULSD basis in both the Group 3 and Chicago markets trading below a 50 cent discount to futures this week.  

RIN values continued their plunge, dropping to 60 cents for both D4 and D6 values, marking a 3.5 year low for D6 (ethanol) contracts and a 4 year low for D4s.

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