Refined Products Have Pulled Back A Nickel After Reaching 2-Month Highs Tuesday Morning

Refined products have pulled back a nickel after reaching 2-month highs Tuesday morning as the odds of Hurricane Beryl making a direct hit on the Gulf Coast oil production and refining zones have been reduced in the past 24 hours.

The European Forecasting model, which has been more accurate than the US model over the past decade, now has the storm making landfall on the NE coast of Mexico early next week, with low odds of a shift to the east that could put Corpus Christi in the crosshairs. The US GEFS model meanwhile keeps the storm over the Gulf of Mexico with a landfall as far east as Lake Charles LA looking possible.

The path of the storm will also matter a great deal for the eastern half of the US next week as the potential for very heavy rain increases from TN to New England the further north and east it moves as it approaches the US. One thing both models agree on is that this storm will not regain major hurricane strength after crossing the Yucatan peninsula Friday, although we’ve seen the past couple of years that the models also seem to struggle to account for the record-warm water temperatures, so don’t be surprised if the actual storm strength surpasses these forecasts next week.

Reminder that spot markets in the US won’t be assessed Thursday or Friday this week. NYMEX contracts will trade in an abbreviated session tomorrow (no settlement) and a normal session with a settlement Friday, so many rack postings around the country may change even though spot markets won’t. US Banks are closed tomorrow and open Friday. British banks are open both days.

The API reported a large draw of more than 9 million barrels of crude oil in the US last week, while gasoline stocks increased by 2.5 million and distillates dropped by 740,000 barrels. The DOE’s weekly report is due out at its normal time today, and since the Federal Holiday is tomorrow, it will not delay next week’s report which is based on forms submitted by refiners, pipelines and terminal operators due every Friday.

The DOE announced the 5 companies that were awarded gasoline in its liquidation the NE gasoline strategic reserve. BP, GE Warren, Vitol, Freepoint and Irving Oil were the only 5 companies that bid on the fuel and all 5 were awarded. The average price of the sale was $2.34/gallon, about 27 cents below the current value of RBOB in the NYH market. The DOE said this sale would lower gasoline prices for American consumers, and currently prices are up about 15 cents since the auction was announced in May.

The EIA this morning published a look at how energy use in the US has changed in the past 250 years. It shouldn’t surprise anyone still reading this that biofuels have seen a tremendous increase in recent years, but you might be surprised to know that they only recently surpassed wood for the top spot in renewable fuel consumption.

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