RBOB Futures Continue to Lead, ULSD Futures and WTI Struggle

RBOB futures are trying to lead the energy complex in a third straight day of gains, while ULSD futures are struggling to stay in positive territory and WTI is finding resistance around the $70 mark. If the RBOB contract is able to break above the $2.06-$2.08 range that capped previous rallies over the past 2 months, charts suggest there’s a quick move towards $2.20 coming, while a failure means we’re probably in for more sideways trading. There are just 6 trading days left before the November contract expiration, and 5 cents of backwardation will put further downside pressure on gasoline prices.

Worst to first: After trading at sharp discounts for weeks, Chicago basis values have jumped this week with gasoline values up nearly a dime, while diesel values are up nearly 15 cents. A delayed restart at BP’s Whiting refinery from maintenance was blamed for the big jump in values. Group 3 values are still heavily discounted so more trucks will be looking to long haul from those markets both to the south and east.

Citgo reported an upset in an FCC unit at its Corpus Christi east facility Tuesday as that unit was in the initial shutdown phase for planned maintenance. The event was short-lived and doesn’t appear that it will interfere with the scheduled maintenance.

The API estimated more inventory declines for refined products with gasoline stocks down 2.5 million barrels last week while distillates dropped by 688,000 barrels, while crude oil inventories were estimated to rise by 4.7 million barrels. The DOE’s weekly report will be out at its normal time this morning, with big swings in the import/export flows possible due to the off-shore impacts of Hurricane Rafael last week.

A Rystad Energy report published Monday highlights the investments that oil majors continue to make in SAF and other renewable fuels, despite numerous canceled projects over the past year. Those investments are a major reason why companies like Exxon are warning the incoming administration not to destroy the IRA and other programs that offer them incentives for producing renewables.