Energy Prices Tick Up as Holiday Travel Surges and Refinery Concerns Mount

Energy markets are moving modestly higher to kick off July as suppliers around the country race to fill up tanks ahead of the holiday weekend which is expected to see a record amount of road travel in the U.S..

As a reminder, most of the world still doesn’t celebrate U.S. Independence Day, so NYMEX futures will continue to trade in an abbreviated session Friday even though spot markets will not be assessed and U.S. equity markets and banks will be closed. Since futures will still be trading for the morning, the likelihood of rack price changes for the weekend increases, although most suppliers will try to avoid making changes unless there’s a big move.

A fire was reported at Irving Oil’s refinery in New Brunswick Monday morning, which is the largest refinery in Canada at 320mb/day and the largest importer to the East Coast. Later reports said the fire had been contained and operations had returned to normal, and Energy News Today reported the fire happened in a Jet Fuel hydrotreating unit and that unit was already being prepared for restart just hours after the incident.

Another one bites the dust? The 113mb/day Lindsey Oil refinery in the UK is going through a liquidation process after its ownership group was deemed insolvent. That refinery produces roughly 10% of the country’s fuel, and will be another interesting test in the government’s attempt to balance the needs for energy security with the economic challenges of the Atlantic basin facing an excess of refinery capacity.

California officials are facing a similar conundrum as they come to the painful reality that their anti-petroleum policies are creating an economic albatross, and are scrambling to find ways to keep refiners operating in the state.

After Tropical storm Barry came and went over Mexico, the National Hurricane Center is giving 30% odds of a storm developing near Florida or the SE coast over the next week. AccuWeather meteorologists had issued a warning on this potential threat last week, days before the NHC, but don’t expect it to turn into a major storm. Those forecasters are still calling for a busy season, but don’t expect the activity to ramp up soon as cooler water temps and Saharan dust continue to limit development, as they often do this time of year. The peak of the season is still 2.5 months away.