Energy Futures Are Trading Higher For A 3rd Straight Day with ULSD Futures Once Again Leading The Move

Energy futures are trading higher for a 3rd straight day with ULSD futures once again leading the move, up 4 cents in the early going. 

Despite moving higher every day this week so far, both RBOB and ULSD futures need to add about another 6 cents to fully erase the heavy losses we saw last week, so this latest rally doesn’t do much to change the technical outlook. Short term charts look mixed, suggesting we’re in for some more back and forth action, while longer term charts continue to suggest we’re in for a spring price rally after prices bottomed out in December. 

Chicago basis values resumed their recovery rally Tuesday after BP officials did not give a clear timeline for restarting the Whiting refinery units shut by a power outage last week. So far ULSD differentials have increased by around 35 cents and gasoline diffs are up around 25 cents since the shutdown occurred last Thursday.

After reporting Flaring Monday at its Wilmington CA refinery, Marathon issued two flaring notices at its Carson facility Tuesday afternoon, one listed as planned and one unplanned, both listing an “essential operational need” as the reason, which wins them the captain obvious award of the day. Basis markets didn’t appear to move on any of the refinery notices and so far despite the heavy flooding and mudslides in areas, pipeline and terminal operations seem to be continuing without disruption.

The API reported a build in gasoline inventories of 3.7 million barrels, while diesel inventories declined by about the same amount. Crude oil stocks were estimated to show a small build of 674,000 barrels. The DOE’s weekly status report is due out at its normal time this morning, with refinery runs once again the number to watch as we see how quickly (or not) facilities are recovering from the rash of weather and power related upsets this winter.

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