The yo-yo action continues for energy markets that are trying to bounce again today after yesterday’s DOE report sparked another heavy sell-off. Today would mark the 6th straight trading session in which prices move in the opposite direction of the previous day if the current gains can hold.
The DOE’s weekly report largely confirmed what the API reported a day earlier with refined products showing large builds and crude oil inventories declining. Refinery runs continue to set records for this time of year which seemed to help push both ULSD and RBOB futures to nickel losses on the day.
Oil prices also sold off heavily on the day, breaking some short term support levels that open the door to more selling longer term. US crude oil production continued its steady climb higher, breaking above 9.7 million barrels per day for the first time in at least 40 years. This is an increase of 750,000 barrels/day from the start of the year, enough to supply several large refineries.
Yesterday’s selling wasn’t limited to petroleum contracts. Ethanol prices dropped to their lowest levels of the year as inventories continue to swell, and ethanol RINs fell below 80 cents for the first time in nearly 2 months. There’s a meeting at the White House today to discuss the Renewable Fuel Standard that seems to have put some fear into the RIN market over the past week. According to a White House spokesperson “”The President understands the importance of the RFS to rural America. He is also aware that workers in the refining sector believe the program isn’t working as intended, and should be improved to reduce their compliance burdens,”