Energy prices are on the move higher for a 3rd straight day, with the major futures contracts now trading 9-10% higher than they were during last Friday’s overnight sell-off.
Crude oil prices were moving lower overnight after OPEC’s monthly oil market report raised its forecast for oil production outside of the cartel by nearly 400,000 barrels/day led by the comeback in US Shale production. We’ll get the latest RIG count from Baker Hughes this afternoon.
Refined products have broken through their 14 day moving averages, leaving the door open to another nickel worth of upside should current levels hold. If WTI can hold on above the $48 level today, last week’s plunge below $44 will look an awful lot like a bear trap that could inspire some more short covering. The weekly charts are not nearly as bullish as the daily charts are however, so it’s too soon to say that the sell-off started when prices peaked 1 month ago today is finished.
Reports that the PES refinery in Philadelphia was having operational issues seem to have helped RBOB gasoline lead the charge higher this morning, even while WTI was trading lower and ULSD was close to flat an hour ago. There have not been any formal confirmations of what may be going on however, so it’s too soon to say what impact this may have on prices or supply longer term.
That refinery has been reported often over the past few years as struggling under the weight of challenging economics, and is now at the center over the debate surrounding the Laurel pipeline reversal which could hamper the margins for East Coast refiners even more.
The recovery rally in RBOB gasoline seems to be helping ethanol RIN values show a little life for the first time this month, rallying by more than 3 cents yesterday, the most significant bounce in weeks. Of course, that move could also have been aided by news this week that several senators are trying to investigate the world’s most famous RIN hater for potential market manipulation.