In a high stakes game of chicken between the renewable fuel industry, the refining industry and the Environmental Protection Agency, it appear that the EPA just made a turn before hitting the brick blendwall.
The oil market got heavy as word of a possible story of a Fed exit, which started to permeate the trading floor on Friday. The other issue is oil going down to the Gulf Coast and whether our production boom will overwhelm the refineries.
OPEC is showing more concern about the rapid drop in oil prices. While a call from the hawks for a meeting is not unusual, it seems that OPEC special meeting or not will more than likely reign in production unless prices rebound dramatically.
While the oil market fell, RBOB gasoline futures have gone crazy. Yet behind the volatility are a story of record high renewable fuel credits, surging ethanol costs and the possibility of government mandated shortages.
Oh sure oil had a lot of reasons to break yesterday! China’s Wen Jiabao putting their breaks on the Chinese red hot housing market, OPEC raising production to aria and of course the rising fear that the Fed is getting closer to taking the punch bowel away
A surge on talk of refining issues and tight gasoline blending components sent prices flying. Yet the lack of follow-through with crude oil and heating oil may mean that this run on gas may soon be coming to an end.