Energy Markets Remain Unfazed In Face Of Increasing Tensions In The Middle East

Refined product futures are drifting higher this morning with prompt month HO trading about a penny over yesterday’s settlement while RBOB trails by about 50 points to start the day. Energy markets have remained largely unfazed in the face of increasing tensions in the Middle East ever since Israel announced they wouldn’t be targeting Iran’s oil and /or nuclear infrastructure in retaliation for Tehran’s ballistic missile strike back on October 1st. Since then, there have been several bombs dropped in the region, the latest couple of which targeted the mayor of a southern Lebanese town and took out Houthi weapons stores in Yemen.

The U.S. Supreme Court rejected energy companies’ petitions to pause new EPA rules aimed at cutting greenhouse gas emissions Wednesday. This latest rule, set to cut pollution caused by burning coal and natural gas for power generation by 90% in the next decade, will stay on the books while the lawsuits play out in the lower courts. Power plants have until July 2025 to get the regulation overturned or begin complying.

The National Hurricane Center has downgraded its 7-day outlook on the system moving across the Atlantic. According to Weathernerds.org, its forecasted path has been updated to show it hugging the Lesser Antilles and Hispaniola, but the NHC now only gives it a 30% chance of cyclonic development.

The EIA reported a 7% increase in the production of biofuels/renewable diesel in 2024. While ethanol production remains the most widely produced fuel in this category (especially in the Midwest, where the food fuel is grown), renewable diesel production outpaced its counterparts in production growth. It will be interesting to see what their 2025 report shows, since the 2024 data they cite is as of January 1 and doesn’t include the hardships some RD producers have encountered this year.

The American Petroleum Institute published its energy inventory estimates yesterday afternoon, showing an across-the-board drawdown in national petroleum stockpiles, most notably, gasoline stocks dropping nearly 6 million barrels last week. If that number is confirmed by the Department of Energy’s official report, due out at 10 AM CDT this morning, it would be the second largest drop seen this year, with the first largest just one week ago.