Industry Continues To Grapple With Fallout From Ida

Market TalkThursday, Sep 2 2021
Pivotal Week For Price Action

Energy futures are ticking higher this morning, recovering from modest losses to start September as the industry continues to grapple with the fallout from Ida, and uncertainty heading into the last weekend of the driving season. 

Ida continues to wreak havoc, 4.5 days after first making landfall.  We’re seeing dramatic images of flooding in Philadelphia and New York City and flash flood warnings continue north to Boston. No word yet if any of the few remaining refineries in PADD 1 were impacted by the storm, but given the widespread river flooding it seems at the very least we’ll see some delays in barge traffic over the next several days.  

Most of the refineries in Louisiana remain offline and recovery efforts have been hampered by a combination of lack of power and flooded roads. The two largest plants, Exxon Baton Rouge and Marathon Garyville are both reportedly attempting to restart this week. The success or failure of those startups will be critical to determine how long the local fuel shortages last, and whether or not they expand to other states since the Plantation line will need their supply to continue operating. 

Yesterday’s DOE report was highlighted by total US petroleum demand smashing its all-time high, nearly 500,000 barrels/day above the previous record set in the summer of 2018. Perhaps even more impressive is that record was set despite gasoline and jet fuel demand remaining below pre-pandemic levels, which is a testament to the strong growth in propane/propylene and the “other oils” category which now regularly surpass distillates as the 2nd largest demand category behind gasoline.

US Crude oil production ticked up to a post-pandemic high of 11.5 million barrels/day, but will drop more than 1 million barrels next week due to the Gulf of Mexico shutdowns.

Click here to download a PDF of today's TACenergy Market Talk, including all charts from the weekly DOE report.

Market Update 9.2.21

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Pivotal Week For Price Action
Market TalkThursday, Feb 29 2024

It's Another Mixed Start For Energy Futures This Morning After Refined Products Saw Some Heavy Selling Wednesday

It's another mixed start for energy futures this morning after refined products saw some heavy selling Wednesday. Both gasoline and diesel prices dropped 7.5-8.5 cents yesterday despite a rather mundane inventory report. The larger-than-expected build in crude oil inventories (+4.2 million barrels) was the only headline value of note, netting WTI futures a paltry 6-cent per barrel gain on the day.

The energy markets seem to be holding their breath for this morning’s release of the Personal Consumption Expenditures (PCE) data from the Bureau of Economic Analysis (BEA). The price index is the Fed’s preferred inflation monitor and has the potential to impact how the central bank moves forward with interest rates.

Nationwide refinery runs are still below their 5-year average with utilization across all PADDs well below 90%. While PADD 3 production crossed its 5-year average, it’s important to note that measure includes the “Snovid” shutdown of 2021 and throughput is still below the previous two years with utilization at 81%.

We will have to wait until next week to see if the FCC and SRU shutdowns at Flint Hills’ Corpus Christi refinery will have a material impact on the regions refining totals. Detail on the filing can be found on the Texas Commission on Environmental Quality website.

Update: the PCE data shows a decrease in US inflation to 2.4%, increasing the likelihood of a rate cut later this year. Energy futures continue drifting, unfazed.

Click here to download a PDF of today's TACenergy Market Talk, including all charts from the Weekly DOE Report.

Pivotal Week For Price Action
Pivotal Week For Price Action
Market TalkWednesday, Feb 28 2024

It’s Red Across The Board For Energy Prices So Far This Morning With The ‘Big Three’ Contracts All Trading Lower To Start The Day

It’s red across the board for energy prices so far this morning with the ‘big three’ contracts (RBOB, HO, WTI) all trading lower to start the day. Headlines are pointing to the rise in crude oil inventories as the reason for this morning’s pullback, but refined product futures are leading the way lower, each trading down 1% so far, while the crude oil benchmark is only down around .3%.

The American Petroleum Institute published their national inventory figures yesterday afternoon, estimating an 8+ million-barrel build in crude oil inventory across the country. Gasoline and diesel stocks are estimated to have dropped by 3.2 and .5 million barrels last week, respectively. The official report from the Department of Energy is due out at its regular time this morning (9:30 CST).

OPEC’n’friends are rumored to be considering extending their voluntary production cuts into Q2 of this year in an effort to buoy market prices. These output reductions, reaching back to late 2022, are aimed at paring back global supply by about 2.2 million barrels per day and maintaining a price floor. On the flip side, knowledge of the suspended-yet-available production capacity and record US output is keeping a lid on prices.

How long can they keep it up? While the cartel’s de facto leader (Saudi Arabia) may be financially robust enough to sustain itself through reduced output indefinitely, that isn’t the case for other member countries. Late last year Angola announced it will be leaving OPEC, freeing itself to produce and market its oil as it wishes. This marks the fourth membership suspension over the past decade (Indonesia 2016, Qatar 2019, Ecuador 2020).

The spot price for Henry Hub natural gas hit a record low, exchanging hands for an average of $1.50 per MMBtu yesterday. A rise in production over the course of 2023 and above average temperatures this winter have pressured the benchmark to a price not seen in its 27-year history, much to Russia’s chagrin.

Click here to download a PDF of today's TACenergy Market Talk.