Energy Market Updates

The strength of the futures market since the new year is somewhat perplexing. Many originally thought the ushering in of a new Administration would see pricing continue...

We would have liked to see a nice correction continue after Monday and Tuesdays dip, but the Market Grinch had other plans. Yesterdays bounce higher focused primarily on...

It’s amazing what the hard times can reveal. Pricing jumped Monday pushing us to the higher end of our current range as new fear arose with the ongoing Russian- Ukraine...

Front month Distillate prices are now at the year low, retracing all the way back to where we sat last JUNE. Grabbing a slice of Q4 and Q1 gallons at these levels seem...

There are a plethora of factors that move futures markets. Technical factors such as support levels, moving averages, strength indicators. Fundamental factors such as...

In what should have been the start of a nice 3 day pullback yesterday, turned into a resetting of ideas. While not long term positive news, morning reports of Inflation...

The large Crude inventory build yesterday overshadowed the decline in finished products and took the floor out of pricing yesterday.  Crude increased over 12 million barrels, largely due to the limited refinery activity in the past weeks.  Refineries are running at about 80% capacity due to maintenance, cold, and limited demand forecasts.  Fundamentals have pushed aside the risk premium in the last few days.  The Global conflict premium had shot diesel pricing up almost $.40 since the first of the year.  With distillate demand down about 10% compared to the same time last year, it makes refiners walk a tightrope on producing even with margins very high on distillates, in the $41 per barrel range currently.

Futures markets continue to trade in wide daily ranges as it digests both inventory and demand data along with monitoring the ongoing “crisis” in the red sea area.  While diesel futures are up over $.20 from the beginning of the month, it appears it could have been a lot worse without taking into account the overall lack of demand.  Both gasoline and diesel inventories are up over last year, +9% on gas and +18% on distillates, the demand figures are what we are watching closely.  Both products are down roughly 3% versus last year, while it doesn’t seem like a large number, in the overall picture it is enough to keep markets in check from skyrocketing higher.  Again, diesel demand is often looked at a measuring stick of the overall health of the economy.  Clashes in the Red Sea shipping lanes appear to be lessening, but still ongoing, keeping many on edge.  It looks like the markets react overnight with news of new attacks, then subside as the day goes on. 

The trend to lower lows every 15 days or so appears to have subsided.  Does this mean the market has found a comfort level for the next few weeks?  My sense is that most are still weighing the Global Demand vs Mid East Risk Premium battle that we mentioned last week.  Global tensions continue to be elevated as Houthis strikes have reached vessels in the Red Sea, Pakistan has now struck Iranian targets and the war of words between all nations ramps ups.  The strike first, speak later motto is what has most on edge.  With Inventories set to be released this morning, a day later due to the Holiday, a careful eye will be not just on stocks, but demand, specifically in the distillate sector.   While the middle of the Country saw a cold snap  last week, here in the Northeast we are starting to get towards more seasonable temperatures.  Again, stay the course with Diesel Winterization programs. 

It’s hard to stay in the Holiday Spirit with 5 out of the last 6 days being up days.  We now sit about $.20 higher than a week ago.  But if you believe in the trend that we have been in for the last four months, there won't be a lump of coal in your stocking in another week.  Rather, it would suggest that we will reach a new low.