WTI crude dropped 4 percent with heating oil falling 2.3 percent

Rising domestic crude inventories and fears of a global economic slowdown are reigniting as the ongoing US/China trade war is denting confidence in continued growth. Crude inventories increased 2.2 million barrels compared with analyst estimates of a 481,000-barrel decrease. Heating oil prices did not decline as much as crude due to US stockpiles dropping by one million barrels versus expectations of a 1.1-million-barrel increase. Crude oil reached its lowest price level since Jan 14.

The bean oil/heating oil spread (BOHO) jumped 7 cents to 24.6 cents per gallon.  Falling heating oil and a rise in soybean oil prices combined to push the spread higher. Heating oil, like crude, is at its lowest level since early January. RIN prices reacted to the rise in the BOHO spread, with both the 2018 and 2019 RINs rising more than a penny. The B19 RIN closed at 42.75, its highest value since March 13. California’s LCFS credit saw bids and offers push higher, closing $191/$193.  Its highest level since late March.

Weekly LCFS Credit Transaction Volume Surges, Prices Trend Higher

California’s Low Carbon Fuel Standard (LCFS) credit volume more than tripled with 325,708 credits trading on 34 transactions.  Weekly credit volume increased 207 percent and was eight percent over the same weekly period last year.  The average weekly credit volume for the year increased from 188,979 to 194,924. Second quarter credit volume is up 11 percent compared to first quarter volume but down 15 percent compared to the same quarterly period last year.

Trading activity was heaviest on Friday with 51 percent of the transactions taking place.  The highest average daily price was $194, which occurred on Monday. The price range credits traded in narrowed from $167.50 – $192.50 the week prior to $175 – $198. The weighted-average credit price was $188.84, up from $187.64 the week prior. At the top of the range 1,051 credits traded and 3,000 traded at the bottom of the range. 76 percent of the credits traded in the price range of $180 to $195, only two percent traded below 180.

NDUSTRY-RELATED NEWS

May 28 (Bloomberg Environment Magazine) EPA Ready to Scrap Biofuel Market Reform in Bid to Boost Ethanol – The EPA is poised to jettison proposed trading restrictions on a $5.2 billion market for biofuel compliance credits, casting aside changes sought by independent refiners complaining of hoarding and wild price swings. READ MORE

May 28 (Biofuels Intl)  US Representatives introduce Renewable Fuel Standard Integrity Act 2019   – Last week, Chairman of the US House Committee on Agriculture, Collin Peterson, together with Representatives Dusty Johnson, Dave Loebsack, Rodney Davis and Roger Marshall introduced the bipartisan Renewable Fuel Standard Integrity Act of 2019. READ MORE

May 24 (Progressive Farmer)  Small-Refinery Waiver Deadline Proposed – With the EPA showing no signs of stemming the tide in granting small-refinery waivers, a bipartisan bill introduced in the U.S. House of Representatives on Thursday would set a middle-of-the-year deadline for waiver applications.  READ MORE

I always look forward to hearing from our customers.  Please feel free to contact me with any questions, comments, or suggestions you may have.  If you buy, sell, or trade any of our products, I would like to hear from you.  Bob Lane at [email protected]  847-549-3640.