TACO Confused Monday: Long Hedges Bleed, Biofuels Refuse to Break
Monday punished long energy hedges built around continued escalation. Brent fell 4.7% to $83.77/bbl, August ICE gasoil lost $113/mt to $1,206.25, and September fell $80.50/mt to $1,150. August/September backwardation compressed 36.6% to +$56.25/mt, while August/December dropped 25.3% to +$216.75/mt. The screen heat crack retreated to $88.43/bbl and the combined refinery crack to $57.02/bbl. Those losses matter, but the remaining values still describe scarcity rather than balance. A one-month gasoil spread above $56/mt and an August/December spread above $216/mt remain extreme. The market liquidated geopolitical premium much faster than the physical system repaired itself.
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