Regret Over Heavy Post Election Sales As D4 And D6 Reach Highest Value In A Year

It’s a quiet start to the Presidents Day quasi-holiday trading with RBOB gasoline futures ticking higher by ½ cent, ULSD down a penny and crude oil contracts ticking back and forth around break even. Spot markets are not being assessed in the U.S. today, so many traders took the day off, and most rack prices won’t change today unless some excitement emerges during the abbreviated futures session.

Markets so far appear to be shrugging off reports that Ukrainian drones have damaged yet another Russian oil refinery, and shut a key conduit for Kazakhstan’s oil exports, and rumors that OPEC and friends will be delaying their wind-down of production cuts again thanks to the ongoing supply overhang.

It was another mixed bag for money managers in energy contracts last week with refined products seeing small increases to net length held by the large speculative trading category, while crude oil contracts saw small decreases. Perhaps most notable in an otherwise quiet COT report is that speculative length in ULSD contracts has reached an 11-month high even while Gasoil (European ULSD equivalent) managed money length remains near the low end of its typical range.

On the credit front, money managers were adding to net length across the board last week with LCFS, CCA and RIN contracts all seeing a modest increase in speculative length. Money managers appear to be kicking themselves for their heavy selling of RIN contracts following the election as both D4 and D6 values reached their highest levels in 15 months last week as the rapid reduction in bio-mass based diesel following the end of the BTC has reduced the supply of those credits. Those still producing biofuels have been eagerly selling into the RIN rally, apparently happy to lock in some of these elevated values before the new EPA (who many believe will be less friendly to biofuels than the prior administration) decides on target values for 2026 and beyond.

A couple of interesting reads for those who didn’t take the day off today: Why Houston Refining’s closure will not be the last, and why California officials are now debating the merits of the state operating refineries themselves to try and become just like Pemex.