Lackluster Moves In Energy Markets Despite Threat In World's Largest Oil Supply

The tepid action continues in energy markets this morning, with NYMEX futures ticking up around 1% following reports that Israel is planning on another attack against Iran.

The lackluster moves despite the latest potential threat in the world’s largest oil supply hub may be due to a pullback in equity markets tempering the enthusiasm for risk taking, or the fact that last year’s attacks intentionally avoided energy targets.

OPEC took time this week to rail against the IEA’s lack of data accuracy. The article from OPEC’s Secretary General titled Finding Nemo, the IEA discovers its ‘missing barrels’ highlighted the 343 million barrel demand revision in the latest monthly market update, which effectively changed the IEA’s reports from showing supply balances from showing a surplus in the past 3 years to a deficit. The two agencies are natural enemies given that the IEA was established specifically to counter OPEC’s influence in the early 70s. The two have had notably different stances on supply/demand balances for some time now, and this latest shift suggests the PHD’s that publish OPEC’s report may be more accurate (despite their obvious lack of objectivity) than the political appointees at the IEA who have become the cheerleaders of a sustainable energy transition.

The API reported more product draws last week with gasoline stocks down 3.2 million barrels while diesel stocks declined by 1.4 million barrels and oil inventories were estimated to increase by 2.5 million. The DOE/EIA’s weekly report is due out at its normal time today, and will be delayed a day next week due to Memorial Day.

The EIA yesterday highlighted the risks to the Gulf Coast refining sector from the upcoming hurricane season which is forecast to be above average once again. While hurricanes provide a dramatic threat to refineries in the region, it’s always worth noting the summer forecast for record heat also has the potential to wreak havoc on operators.

More trouble for California refineries: PBF’s Torrance refinery (LA area) reported multiple unplanned flaring events in the past 24 hours, and also reported that it would need 8 days of “planned” flaring to fix those issues. This comes on the heels of an upset at Chevron’s El Segundo refinery Sunday night. LA Basis values have ticked up modestly following those upsets, but so far the gains are miniscule compared to the 3 big spikes we’ve seen earlier this year.

Exxon reported an “inadvertent hydrocarbon ingress” (AKA a leak) at its Baytown TX refinery Monday that affected a sour water system. The upset lasted 16 hours starting Monday night, but so far doesn’t appear to have disrupted the other operating units.