The pair of long-awaited announcements failed to stir up much excitement in energy prices Thursday as both OPEC and the EPA stuck to expectations for 2018. The new month is starting on a stronger note with all of the energy contracts moving higher this morning. The big question for December is whether or not the bulls can keep the momentum or if we’ll see the seasonal influences drag prices lower into year-end.
Perhaps the most interesting part of the announcements was that the EPA got their press release out early in the morning, while OPEC and Friends took most of the day to finally release their plans for next year, both of which are a change from recent norms.
The EPA made small increases to the 2018 final RFS volumes from what they proposed in July. While the volumes themselves equate basically to a rounding error, it’s worth noting that the original proposal had decreased requirements from 2017 to 2018 in 3 of the 4 renewable categories, while the final ruling has increases in 3 out of 4. RIN prices had been bid from 90 up to 93 ahead of the release, but dropped back to 90 after it, and held steady around that level the rest of the day. Ethanol prices meanwhile were pushed to their lowest levels of the year under the weight of ample inventories and a bearish outlook on the charts.
OPEC & friends (aka Russia) announced that they were extending their oil output cuts for 9 more months, from March 2018 through the end of the year. The group did however say that this plan would be up for review mid-year, so it is only a “firm” agreement for 3 additional months. Perhaps more importantly, they did not put any official language in the agreement regarding Libya and Nigeria, who were exempt from the original deal, and who’s ability to increase production has occasionally off-set the reductions from the other countries. Oil prices barely flinched as this type of deal had been talked about for weeks, and
While energy prices shrugged off their big news, equity markets surged yesterday after it seemed that the senate was close to passing a tax reform package. That optimism seems to have been erased overnight as new reports suggest the Senate may fail to even bring the bill to a vote this week.