A Rash Of Refinery Issues Is Pushing Product Prices Higher To Start Tuesday’s Session As Traders Return To The Office

A rash of refinery issues is pushing product prices higher to start Tuesday’s session as traders return to the office and start trying to assess whether or not the winter weather will have a lasting impact on supply. Another fire at the East Coast’s largest refinery Monday afternoon seems to be the driver of the rally with RBOB gasoline futures leading the charge, while oil prices are lagging despite the violent escalation in the Middle East disrupting more shipments through the Red Sea.

Today is the 10th official trading session for NYMEX contracts of the year, and the Red Green pattern of gains one day and losses the next is still holding for ULSD futures that have bounced 9 cents from the low trade reached during yesterday’s abbreviated session. While that back and forth action leaves the contract in neutral technical territory near term, the big bounce leaves a chance that we’ll see a run towards the $3 mark before the winter is over.

Energy News Today is once again ahead of most other news agencies on the topic of refinery upsets, as the first outlet to report the fire at the P66 Bayway refinery as it was in the process of ramping up operations following another fire on December 29. They’re also reporting that Total’s refinery in Port Arthur TX and Suncor’s refinery outside of Denver were both forced to shut overnight due to power outages. 

At least 6 Texas refineries have reported flaring to the TCEQ since the weekend, with the record-setting cold the common theme. Marathon’s Galveston bay refinery also reported an upset to a residual hydrotreating unit Monday, although it’s unclear if that issue was due to the weather, or just the facility’s standard weekly disruption.

This morning is the big test for electric grids across the south as the freezing temperatures reach the Gulf Coast and there’s not a holiday demand buffer. We should know by afternoon whether or not the power stayed on, and if the country’s major refinery center was materially impacted as a result.

While the storm’s impact on US refiners is the big story of the week, reports that the Dangote refinery is finally producing diesel fuel could have the longer-term impact on refiners reliant on exports into the Atlantic basin. Then again, Nigeria is not known for consistency, so the plant’s actual output is likely to remain a wildcard for supply this year.

Reminder that the weekly inventory reports are delayed a day due to the Holiday this week, but we will get a look at OPEC’s monthly report tomorrow morning.

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