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05-11-2021 Daily Market Comments

6301 Ralston Road – Arvada, CO 80002 - 

Bryant Gimlin, Energy Risk Manager ~ Office: (303) 350-3757 Cell: (970) 590-8782

Daily Market Comments for: For Tuesday, May 11, 2021

Date

Crude Oil

Diesel

RBOB

Natural Gas

05/04/2021

$65.69 M21

$1.9988 M21

$2.1512 M21

$2.9670 M21

05/05/2021

$65.63 M21

$2.0025 M21

$2.1513 M21

$2.9380 M21

05/06/2021

$64.71 M21

$1.9895 M21

$2.1137 M21

$2.9280 M21

05/07/2021

$64.90 M21

$2.0106 M21

$2.1269 M21

$2.9580 M21

05/10/2021

$64.92 M21

$2.0166 M21

$2.1334 M21

$2.9320 M21

                                                                                           

In the News: The big news yesterday was the Colonial Pipeline shut down after it experienced a cyberattack for ransomware. The 5,500-mile pipeline system moves about 100 million gallons of Gasoline per day from the Gulf Coast, through the Southeast and up into New Jersey. Sources say that hackers stole almost 100 gigabytes of data from Colonial’s network prior to locking its computers and demanding payment.  Stories are the culprit is a gang called DarkSide.  The cyberattack has shut lines 1,2,3 and 4 and has stranded barrels of both gasoline and distillates impacting deliveries throughout the system.  Company officials said “Colonial Pipeline is experiencing network issues impacting the operation of the Colonial Pipeline system.  The Colonial technology team is aware and working to restore service as quickly as possible.”  Repairs are expected to take at least a week as restart must me done in phases in accordance with federal regulations. The news rallied prices early, but COVID fears kept a lid on the upside. The World Health Organization said the COVID variant found in India spreads more easily and shows signs of being able to evade (current) vaccines.

Products: Group and Chicago basis values slightly lower. East Coast basis was up about a penny each, which was a relatively mild reaction to the Colonial pipeline problems. Group Gasoline settled $0.0025 lower to -$0.0825; Group Diesel ended $0.0125 lower to +$0.0225. Chicago Gasoline basis ended unchanged at -$0.0400; Chicago Diesel ended $0.0025 lower to +$0.0875.

Denver Diesel supply is in great shape as Group barrels have arrived in anticipation of the shortage caused by the Suncor turnaround. Gasoline is being discounted to liquidate high RVP product and make room for summer low RVP product, but the rumors are that the summer grade may be in short supply because waivers in other states have reduced production in the Group. The improved supply is likely short term as Suncor has started its full shutdown of units 1 and 3 for maintenance which is expected to take until sometime in June. Yet good supply now should help the abnormally high basis levels post a significant correction.

NYMEX implied Refinery margins ended higher on Monday as the Colonial pipeline news was most supportive for Refined Products. The June Gasoline Crack ended $0.25/bbl higher to $24.68/bbl; the June Diesel Crack ended $0.23/bbl higher to $19.78/bbl.

Overnight: Easing concern over Colonial pipeline issues have energy futures lower this this morning on the overnight electronic session. As of 05:00 in the spot months; (Jun) WTI Crude Oil is $0.43 lower to $64.49; (Jul) Brent Crude Oil is $0.51 lower to $67.61; (Jun) Diesel is $0.0053 lower to $2.0113; (Jun) RBOB is $0.0054 lower to $2.1250; (Jun) Natural Gas is off 25 to $2.9070.

Short Term: Colonial pipeline officials expect operations to be back up by the end of the week following a cyberattack Russian-backed DarkSide on Friday. The start-up must occur in phases per federal regulations. While that is bearish, Middle East tensions escalate after Israel strikes Gaza. Hamas fired rockets at Jerusalem after hundreds of Palestinians were hurt in clashes with Israeli forces at holy site. Early downside could also be attributed to the World Health Organization reporting the COVID variant found in India spreads more easily and shows signs of being able to evade (current) vaccines and is being found in parts of the U.S. and the DOW is called to open 150 lower after ending 35 lower yesterday at 34,743. Today is set to be a choppy session with short covering likely late in the session as traders build length ahead of weekly inventory data. Bullish sentiment continues to rule. End users should cover with Maximum Price contracts.

Natural Gas: Natural Gas futures pulled back from Friday’s rally as fundamentals favor the bearish trade. On Thursday the IEA said previous week injection was 100-bcf bringing total stocks up to 1.998-tcf. The build was below the same week last year yet above the five-year average. Consequently, the deficit to last year increased to 307-bcf from 302-bcf the previous week. Compared to the five-year average the previous week deficit decreased from 40-bcf to 21-bcf.

Propane: Cash Propane showed strength in early trade yet eased when Crude Oil came off from sharp morning gains. Conway ended unchanged at $0.7800; Mt. Belvieu ended $0.0050 higher to $0.8050. On Wednesday the EIA reported Propane stocks increased 0.5 million barrels, but the year-on-year deficit increased to 17.9 million barrels, 19% below the five-year average. The culprit is demand, which was 204,000-bpd above the previous week and 527,000-bpd above the same week last year. Exports were down 204,000—bpd to 0.990-mbpd while Production was up 56,000-bpd, to 2.310-mbpd.

“The risk of loss trading futures can be substantial. Each investor must consider whether this is a suitable investment. This report is for informational purposes only and is not to be construed as an offer to sell or a solicitation to buy the commodities or securities herein named. The information in this report has been obtained from sources believed to be reliable but is not necessarily all-inclusive and is not guaranteed as to its accuracy. Unless otherwise stated any quotes provided by Hill Petroleum does not include commissions or bid/ask spreads. Any opinions expressed in this report are those of the author. Individual employees of Hill Petroleum may express different or contrary opinions. The above recommendations may or may not be followed by Hill Petroleum or its 0employeefs."

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