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The other day I mentioned how the futures markets rose, yet the cash markets fell. Yesterday was the reverse for some. While ULSD futures closed down $.1557 to $4.0413, ARGUS cash trading edged up .0193. We are obviously in the most volatile period I have seen in all my years.
Unfortunately you are all reading your nightly pricing correctly. As seen below, ULSD prices have risen almost a full $1 in the last four sessions.
On Tuesday morning we were feeling pretty good, relatively speaking, as the ULSD pit was almost .40 less than a week ago. Demand concerns over China’s lockdown and slowing production rates put pressure on an already inflated market.
The last three sessions have seen .4373 get peeled off the ULSD front month contract, with massive intraday swings. Yesterday at the open, APR22 ULSD fell almost .25 before rallying back to finish down only .0673.
March came in like a lion, lets hope it goes out like a lamb…..
What you are seeing on your nightly pricing is real, unfortunately. ULSD futures have risen over .80 in just 5 sessions. Since late November 2021, when the concern of the latest Covid Variant were announced, the pit has risen over $1.65.
Natural gas hit $5/mmBTU on the NYMEX for the first time in over 3 years last week, over concern about supply and a increase in demand due to to continuing frigid temperatures throughout the country. As of Jan 30, prices have backed off some but the underlying supply issues behind the spike may still play a relevant role in Nat Gas volatility going forward.
NYMEX values appeared to find support just above the 2.90 level on front month HO after a long cold stretch. The Polar Vortex that gripped a large portion of the Country, and plagued us in the Northeast with long terminal lines, appears to be subsiding. Many of us are getting a well deserved breather as we return to somewhat normalcy.
Last night API's set the early tone for todays rice action as preliminary numbers showed large draws in distillates. Those numbers were confirmed this morning with the EIA releasing a staggering 4.8mbl draw in distillates vs expectations of a mere 700k. Gasoline was down slightly at 345k and Crude showed a slight build at 375k bls. On the surface it appears distillate demand is on the rise, not only in the US, but also from an export position. Soon after the data released, pits jumped almost .04, and stayed in that range for most of the afternoon. Supporting the bullish price action was FED meeting minutes which appear to confirm last weeks chatter that we will start to see some significant unwinding of the Bond buying program in the months to come, as well as a positive retail report for October. The hope is that a positive October doesn't turn into a lackluster November and December which is often the case in the retail world. News hit mid afternoon of US-Iranian talks ended almost as quickly as it started, one report said the talks lasted less than 10 minutes with few words spoken. Even with the draw in distillates, the market appears to be well supplied as Crude actual lost .01 to close out at $93.33, RBOB added .0235 to $2.6630 and HO led the gainers settling up .0487 to $2.9545. Again, well within its comfort zone.
We have all been in this far too long to get overly excited when the pits fall a few cents - like New England weather, wait and it will change.