Traders Are “Mulling” Ahead Of What Seems To Be A Quiet Start To The Week

Refined product futures are trading slightly higher this morning with the prompt month distillate contract adding 2 cents to start the day and gasoline trading higher by about a penny. WTI and Brent futures are trading just on the red side of flat with a lack of headlines to push any inspired trading. Persistent inflation and a robust American economy are reported to be the factors traders are “mulling” ahead of what seems to be a quiet start to the week.

Money managers placed their bullish bets on American crude oil prices last week, adding new long positions while cutting existing shorts. The opposite is seen in refined products, however, as the ‘smart money’ added new short interest in both RBOB and HO, dropping their total net position in both contracts. Of note: the open interest in the WTI Midland contract, which began trading in 2018, hit a new all time high last week, but the speculative funds seems to be keeping away with the other category of traders making up the vast majority of positions held.

Congressional leaders are being called to the White House this week as Biden attempts to make some sort of headway in avoiding a partial government shutdown Friday. In addition to the Ukrainian Aid Package, funding for several agencies and programs are up for vote. There could be material economic impact if a consensus is not reached.

Baker Hughes reported a net increase of six oil production platforms last week, two of which came online in the Permian Basin region.

RIN prices continued to slide last week with both the D6 and D4 falling to ~$.40 per credit. There is little on the horizon to suggest this trend won’t continue, barring any mandate changes from the feds.

Click here to download a PDF of today's TACenergy Market Talk.