Energy Prices Continue To March Higher This Week

Energy prices continue to march higher this week, with refined products seeing 2-4 cent gains in the early going, while crude oil prices are up around $1. Volumes continue to be light in pre-holiday trading, with little in the way of market-moving news, and fewer people around to read it as the week progresses.

The blizzard bringing the coldest Christmas in 30 years is sweeping the country, and certainly won’t help fuel demand as thousands of flights are being cancelled and drivers stay off the roads. The high winds and plummeting temperatures are hitting Texas today, so we should know more tomorrow on whether or not there are supply disruptions from this storm as well.

A few notes from yesterday’s DOE weekly status report:

Total US Crude supplies, including the SPR, dropped to a 36 year low last week. 

Gasoline inventories increased for a 6th straight week, outpacing their typical seasonal increases after the shift to winter-grade products. Total gasoline stocks are now above 2021 levels, after 6 months of holding well below their seasonal range. Refiners cut back on run rates for a 2nd week as that rapid increase in inventories has some projecting containment issues this winter if demand continues its sluggish pace.

Diesel demand saw a healthy spike last week as the fleet of delivery vehicles no doubt contributed to the pre-christmas rush. Expect those consumption estimates to plummet over the next two weeks as commercial fuel use collapses over the last week of December and first week of January.

Exports of gasoline and diesel slowed noticeably last week, although both remain well above average levels. There are likely to be some big swings in import/export flows the next two weeks as traders around Texas try to minimize their year-end tax exposure, not to mention the potential impacts of the winter storm on port activities.

RIN values have seen steady buying this week, with D6 values reaching a 3 week high after plummeting to start December following the EPA’s proposal for the RFS for the next 3 years. 

Click here to download a PDF of today's TACenergy Market Talk, including all charts from the Weekly DOE Report.