Diesel Prices Are Leading The Energy Complex On Another Rally To Start The New Year’s Week

Diesel prices are leading the energy complex on another rally to start the New Year’s week trading up 4 cents/gallon so far this morning while RBOB futures are only up a penny and WTI is up around 30 cents/barrel. Concerns about colder weather and the end of a major natural gas deal between Russian and Europe contributing to natural gas prices rallying, which appears to be pulling diesel prices as they become the supplemental option if nat gas becomes tight.

Valero reported a fire at its Port Arthur TX refinery on Friday, with Energy News subsequently reporting that the facility was shutting a 175mb/day crude unit and 55mb/day coker unit for repairs. The next day, the region – which is home to 4 refineries that make up 10% of total US capacity – was hit by a deadly tornado outbreak that stretched for hundreds of miles. While Pt Arthur was directly in the storm’s path, there have not yet been any reports of upsets at any of those facilities, or any others along the Gulf Coast.

Reports of an issue at BP’s Whiting IN (Chicago Area) refinery Friday had spot markets ticking higher, until the company reported that a leak in an adjacent pipeline had not impacted the facility’s operations.

The CFTC’s weekly COT report was delayed a day due to the Christmas holiday and will be released later this afternoon. We’ll see the same pattern for the next report due to the New Years holiday. The ICE COT data was released, and it showed that money managers were giving back some of the net length added in the week prior following the 5 for 5 rally in the middle of the month. Brent crude saw an outflow of more than 30,000 futures and options contracts on the week, which accounts for roughly 17% of the net length held by large speculators. Gasoil contracts (European ULSD equivalent) saw a small tick lower in speculative length of just a couple hundred contracts, after gaining more than 20,000 contracts worth of net length the week prior.

Baker Hughes reported no change to the total rig count for US oil or natural gas rigs last week, with 1 new rig in the Williston basin offsetting a decline of 1 rig in the Eagle Ford. Canada meanwhile saw its seasonal slide continue, with 66 out of the 110 rigs active a week before shutting down for the winter.