Effects of the Saudi oil field attacks on Biodiesel pricing

Effects of the Saudi oil field attacks on Biodiesel pricing

Volatility in the energy sector following attacks on Saudi oil fields over the weekend has whipsawed prices as well as the bean oil/heating oil spread (BOHO).  The BOHO fell 11 cents yesterday as oil prices surged higher, and then climbed seven cents today as oil prices declined.  The BOHO is down 4 cents so far this week, but up 40 cents from where it was at this time last year.

RIN values are driving higher on continued hopes that the Trump administration will follow through on its tentative agreements to bolster renewable volume obligations.  One agreement will add 500 million gallons to both the advanced mandate and the conventional ethanol mandate.  The other will attempt to account for small refinery waivers and is expected to put 1.35 billion gallons back into the 2020 RVO.  Depending on actual gasoline usage this could push the implied ethanol mandate back towards the perceived 10 percent blend wall. Doing so, places the D6 RIN back into play and will cause the D4/D6 RIN gap to narrow.

California’s LCFS credit reportedly traded $200 today and was last indicated to have a Jan 2020 bid of 199 versus an offer of 201.5.  Oregon’s CFP credit reportedly edged lower and is now reflecting a $159 offer. The 2019 and 2020 biodiesel RINs rallied three cents to 53 and 55.5 cents. Ethanol RINs were up 1.5 and 2.5 cents to 24.75 and 29.5 for the 2019 and 2020 vintages. Both the 2019 and 2020 biodiesel RINs are trading above levels prior to the small refinery exemption release on August 9.  The ethanol 2020 RIN is trading over that level as well, while the 2019 ethanol RIN has not quite recovered all its lost ground.

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