Refined Products Rally As “Buy the Dip” Sentiment Drives Prices To Multi-Month Highs

Buy the dip is the theme of the week so far as refined products once again test multi-month highs following failed sell-off attempts Monday morning and again overnight. ULSD futures are once again leading the NYMEX contracts higher as they try to keep pace with a 3% rally in European diesel prices, suggesting this rally continues to be a miniature version of what we saw in 2022 where the world is racing to find replacement supplies for suddenly missing Russian barrels.

The December RBOB contract is trailing the move in ULSD so far, but did manage to reach its highest level since June at $1.9904 in a bit of counter-seasonal strength just before US gasoline demand typically runs off a cliff after Thanksgiving.

While markets are open during the Federal Veteran’s Day holiday, banks are closed and the weekly inventory reports will be delayed a day with the API’s estimates due out Wednesday afternoon and the DOE’s weekly update due out Thursday at noon eastern time. A recap of what’s open and closed pertaining to fuel markets for the balance of the holiday season is included below.

In addition to the weekly updates, we’ll also get the monthly reports this week with the EIA and OPEC reports due out tomorrow morning, while the IEA’s monthly report will be released Thursday morning and all of them are likely to note that uncertainty surrounding the latest round of sanctions will cloud their forecast.

Biofuel lobbying groups have issued their objections to the latest round of Small Refinery Exemptions to the Renewable Fuel Standard that were granted by the EPA on Friday. The agency is considering whether to reallocate 50-100% of the RINs that are no longer obligated due to those waivers, and while a final ruling was expected by year end, the government shutdown makes that deadline less likely to be met. A table of the refiners that have applied for the exemption in the past 5 years and their status is included below.

Ukraine’s drones hit the 140mb/day Saratov refinery for a 2nd time in November, and the 7th time this year as their campaign against Russia’s energy assets continues. Russia is also targeting Ukraine’s energy assets but is more focused on power generation than oil refining.

Warren Buffett announced that he’s “going quiet….sort of” in his Thanksgiving letter as he prepares to hand over control of Berkshire Hathaway at year end. Like most of his publications, it’s worth a read, and like most of his publications, the news will pick out a few of the more optimistic quotes and gloss over some realistic reminders like this:

“Our stock price will move capriciously, occasionally falling 50% or so as has happened three times in 60 years under present management. Don’t despair; America will come back and so will Berkshire shares.”