Refined Products Poised To Test Their Peak September Trading Range

Refined products are pushing higher for a 2nd day and appear poised to test the top end of their September trading range this week. ULSD futures are leading the way once again, up 4 cents on the day and more than 8 for the week already. Technical indicators remain largely stuck in neutral as prices have been choppy and aimless the past couple of months, so it’s hard to get too excited about a rally here unless ULSD can get above the $2.40 mark and RBOB can get above $2.05, which would open the door to bigger gains on the charts.

U.S. equity markets continue to hold at record highs this morning, as an appeals court blocked the White House attempt fire a Fed Governor ahead of tomorrow’s FOMC announcement, giving markets some relief that the central bank can remain independent.

Today is the first day terminals along the East Coast are allowed to start selling winter-grade gasoline bringing supply relief to several regional terminals that decided to run out of summer-grades a day or two early rather than risk having to sell product at a cheaper price. Reports that the first gasoline cargo from Nigeria’s Dangote refinery was offloaded in the NYH yesterday suggest that facility is able to produce U.S. spec gasoline, but perhaps only a winter grade so far.

Diamond in the rough? A Reuters article this morning accuses the largest RD and SAF refinery in the US of using feedstocks sourced from cattle farms that illegally deforested the Amazon. The article does highlight that the beef tallow used was certified as sustainable by the International Sustainability and Carbon Certification (ISCC) system, which is yet another black eye for the carbon certification industry that’s struggled with fraudulent credits for years, even before they were used to pay basketball players. The whole situation with allegedly illegal feedstocks may prove to be a moot point however as imported feedstocks won’t qualify for the 45Z tax credit and are currently set to only qualify for 50% RIN value, reducing the green that really matters to these facilities.

The NHC is tracking 2 potential storm systems this morning, the first is given 90% odds of being named in the coming week, but forecast models show it hooking north and east out to sea and not threatening the US coastline. The 2nd system is given just 20% odds of being named in the next 7 days but currently shows a more dangerous path if it does develop. AccuWeather Forecasters continue to suggest that the back half of September is looking ripe for storm development particularly within the Caribbean and the Gulf.

Want some good news on the emissions front? The EIA yesterday highlighted a 30% drop in per capita CO2 emissions in the U.S. over the past 2 decades, primarily due to shifting away from coal-fired electricity generation to natural gas, while renewables played a smaller role in those improvements. While the U.S. population increased by 14% during that stretch, total emissions dropped by 20%. Transportation fuels also played a role in the reduced emissions primarily due to the reduction in sulfur used in diesel and gasoline.