Refined products are attempting to drag the energy complex lower this morning, while crude oil prices seem content to stick to their trading range. OPEC is wrapping up a 2 day meeting today, but so far there has been little talk of any changes to the cartel’s strategy, and the market is reacting as if they don’t expect anything to happen.
The reluctance by crude oil to join in on the product sell-off could just be traders wanting to wait and see what OPEC says before joining in on the fun, or it could be from signs that the refinery issues that sparked heavy buying in July are now resolved.
The low $1.60s for both RBOB and ULSD prices appear to be pivotal near term, as the charts offer little support between current levels, and a 7-10 cent drop should this support break.
While the daily changes in flat price have been lackluster ever since the July rally stalled out, there has been some notable selling in time and crack spreads over the past week that may influence refiners as the summer winds down.
The September/October RBOB spread (aka U/V, aka the Sunburn spread) has collapsed almost 3.5 cents in the past 7 sessions, as the end of the summer driving season – and the fall RVP transition – is now in sight. While that gasoline weakness has certainly had some drag effect on the rest of the complex, it has not been enough to break crude oil out of its trading range, and may not be unless the other contracts beyond September break lower as well.
Ethanol RINs have stabilized around the 87 cent mark over the past week, and yesterday CNBC explained how a major bet on lower RIN prices went so wrong.