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Market Intel Archives

Gasoline prices moved lower as Hurricane Irma is expected to have negative effect on demand

September 06, 2017

Recap: With Hurricane Irma expected to have a negative effect on demand, gasoline prices plunged to pre-Harvey levels. October RBOB fell as much as 5.14% in overnight trading, reaching a low of $1.6579 a gallon. Losses were pared, as weather forecasts changed, putting Irma smack through the middle of Florida. October RBOB settled at $1.6991 a gallon, down 4.9 cents, or 2.8%. October heating oil fell less than half a cent, to settle at $1.748 a gallon.

With some of the refineries in hard hit areas of Texas slowly coming back online, crude oil prices rose to their highest level since August 14th. October WTI settled at $48.66 a barrel, up $1.37, or 2.9%. This was the highest settlement for a spot contract in three weeks. November Brent settled at $53.38 a barrel, up $1.04, or 2%.  

Fundamental NewsOPEC’s Secretary General, Abdallah Salem el-Badri, said OPEC will continue its ongoing efforts to ensure much needed stability in the oil market, to contribute to mitigating any disruption to current or future supply following Hurricane Harvey.

Russia’s Energy Minister, Alexander Novak, said Russia and Saudi Arabia discussed extending the OPEC/non-OPEC output cut agreement although no specific decisions have been taken. 

Iran’s Oil Minister, Bijan Namdar Zanganeh, said OPEC compliance with planned supply cuts has not lessened.  He said OPEC members’ compliance with the agreement to cut output has increased in recent months.  He said he believed the market was balanced.  He said non-OPEC cooperation is good, especially from Russia. 

Royal Dutch Shell said well operations have restarted after a full rig inspection at the Perdido oil platform in the US Gulf of Mexico, which was shut due to Tropical Storm Harvey.  There is no timeline yet for a restart of production, which will begin after all inspections are complete and the pipelines and refineries are back on line to accept product. 

ConocoPhillips said its oil production in the Eagle Ford shale region reached about 50% of its pre-hurricane capacity of 130,000 bpd of oil equivalent, and is expected to reach 80% by Tuesday evening. 

Enterprise Products Partners LP made significant progress in restoring service at all of its major assets impacted by Hurricane Harvey. 

Colonial Pipeline Co restarted Line 2 between Houston, Texas and Lake Charles, Louisiana and its main gasoline line, Line 1, from Pasadena, Texas to Houston. 

Valero Energy Corp asked federal regulators to allow or direct Colonial Pipeline Co to lift gasoline grade requirements in the wake of Hurricane Harvey.  It said Colonial’s move to restrict the grades of gasoline flowing on its system is inconsistent with the intended effect of the US EPA’s emergency fuel waivers for 38 states and Washington DC after the hurricane shut refineries and caused an increase in gasoline prices. 

Pemex said Hurricane Harvey forced the cancellation of several crude oil export shipments.  Due to the damage inflicted by the hurricane on the US Gulf Coast refining center, Pemex arranged for alternative gasoline and diesel cargos from suppliers elsewhere. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $49.28, up 63 cents

RBOB - Oct $1.6759, down 2.32 cents

HO -Oct $1.7606, up 1.27 cents

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Oil market posted an inside trading day as the shutdown of refineries continued to weigh on demand

September 05, 2017

Recap: The oil market on Friday posted an inside trading as it failed to breach Thursday’s range.  The market erased some of its previous gains as the shutdown of several refineries in the wake of Tropical Storm Harvey weighed on demand.  The oil market was also pressured as the RBOB market pulled back after it rallied over 14% on Thursday to a level not seen since mid-June 2015. News that a couple of Texas ports could be reopening and a couple of pipelines out of the Houston region could be increasing their flows contributed to some profit taking across the energy complex.  The crude market posted a low of $46.56 but rallied back to a high of $47.34 ahead of the close.  The October WTI contract settled up 6 cents at $47.29, while the November Brent contract settled down 11 cents at $52.75. 

Meanwhile, the RBOB market continued to trend higher overnight and breached Thursday’s high of $1.7825 as it rallied to a high of $1.7832.  However, the market sold off to a low of $1.696 on profit taking following Thursday’s surge in price.  It later settled in a sideways range and ended the session down 3.13 cents at $1.7479.  The heating oil market settled up 49 points at $1.7468.

Fundamental News: Baker Hughes said US energy firms did not add any oil rigs this week as Hurricane Harvey moved into Texas, forcing drillers to halt production and refiners to shut plants.  The total oil rig count for the week ending September 1st remained at 759. 

The IEA said it still sees no need for a coordinated international release of oil stocks after Hurricane Harvey disrupted a large portion of US refining and some production facilities.  The IEA said it was monitoring the situation in Texas and Louisiana to assess the hurricane’s impact on oil and gas markets and was in very close contact with US authorities.

US Energy Secretary, Rick Perry, said the Department of Energy has approved the release of up to 4.5 million barrels of crude from the SPR.  This is an additional 3.5 million barrels from the 1 million barrels approved on Thursday. 

The AAA reported that the US average retail price of gasoline increased to nearly $2.52/gallon, the highest level since August 2015. 

The Port of Houston Authority said heavy current into the Houston Ship Channel at the Port of Houston was making it unsafe to bring in vessels. 

The Explorer Pipeline Co aims to restart its main lines this weekend as refineries indicated they would be able to resume supplies.  The line that runs from Houston, Texas to Tulsa, Oklahoma is expected to return to service by Saturday while the line from Tulsa to Chicago is expected to return by Sunday. 

Magellan Midstream Partners is planning a restart on its Bridgetex and Longhorn crude pipelines either late on Friday or early Saturday pending successful testing.  The two pipelines were shut after Hurricane Harvey moved through the Houston area.  Inbound crude at Crane and Colorado City in Texas will be allowed to restart after the two pipelines resume operations.   

Bank of America Merrill Lynch said Brent prices may fall to $47/barrel as the oil overhang caused by Hurricane Harvey is likely to exceed 40 million barrels. 

IIR reported that US oil refiners are expected to shut in 3,253,000 bpd of capacity in the week ending September 1st, reducing available refining capacity by 2,688,000 bpd from the previous week.  IIR expects offline capacity to increase to 3,319,000 bpd in the week ending September 8th. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $48.60, up 61 cents

RBOB - Oct $1.6824, down 6.53 cents

HO -Oct $1.7339, down 1.28 cents


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Gasoline prices continued to rise as shortages caused by Hurricane Harvey remain

September 01, 2017

Recap: The RBOB market on Thursday surged over 14% as it traded to levels not seen since mid-June of 2015.  This followed reports that Motiva’s 603,000 bpd Port Arthur, Texas refinery may be shut as long as two weeks for assessment and repairs of any damage after the refinery was shut on Wednesday due to flooding caused by Tropical Storm Harvey.  Also, reports that the Colonial Pipeline was partially shut in exacerbated the expected shortage of gasoline in the wake of the hurricane.  The RBOB market, which opened near its low of $1.9121, quickly bounced off that level and never looked back as traders covered their short positions ahead of the September contract’s expiration at the close.  The market extended its gains to over 28.5 cents as it posted a high of $2.1705 in afternoon trading and settled up 25.52 cents at $2.1399.   Meanwhile, the heating oil market settled up 8.37 cents at $1.7575.

Oil prices followed suit, though less dramatically, and rallied $1.40 as it traded to $47.36 early in the session.  The market, which posted an outside trading day, erased some of its gains and traded in a 45 cent range for much of the session before it rallied to a high of $47.47, ahead of the close.  The October WTI broke its three day losing streak and settled up $1.27 at $47.23.  Meanwhile, the October Brent contract settled up $1.52 at $52.38. 

Fundamental NewsThe US Energy Department will release a total of 1 million  barrels of crude from the Strategic Petroleum Reserve in response to Tropical Storm Harvey.  It is the first emergency release since 2012.  The release will be delivered to the Phillips 66 refinery in Lake Charles, Louisiana. 

US Energy Secretary, Rick Perry, said about 30% of output at Texas refineries is off line due to Tropical Storm Harvey.  He stated he did not know how long it will take to get production back on line at Texas refineries.  He added that US gasoline prices are going to increase in the wake of Hurricane Harvey and warned against price gouging. 

Traders are booking tankers to transport European gasoline across the Atlantic in the aftermath of Hurricane Harvey.  A number of gasoline tankers have been booked over the past couple of days out of Europe to the US and Latin America, with about 12.5 million barrels expected to leave the region in the first half of the month.  Over the past week Mexico’s Pemex has booked at least seven cargoes of gasoline or 2.1 million barrels from Singapore, Canada and Europe.  Also, at least three tankers carrying diesel have been booked out of Europe and the Mediterranean to go to Brazil. 

According to Bloomberg, ships carrying about 18.1 million barrels of imported crude from Latin America and the Middle East are drifting in the US Gulf as of August 30th as 11 ports in Texas and Louisiana are closed due to Hurricane Harvey.  This is compared with 25 ships carrying 16.8 million barrels that were drifting off the coast on August 29th. 

Magellan reversed the flow of refined products through Oklahoma to serve Dallas with fuel.  This would replace product that flowed north from Houston ahead of Hurricane Harvey. 

Colonial Pipeline said its fuel lines between Houston and Hebert, Texas remain down but were expected to return to service on Sunday.  It said it continued to pump all available product from Lake Charles.  It said its main lines east of Lake Charles remain operational.

Reuters reported that OPEC’s total oil production in August fell by 170,000 bpd on the month to 32.68 million bpd.  Production from the 11 members bound by the output cut agreement fell by 60,000 bpd to 29.93 million bpd in August.  They reduced their output by 1.038 million bpd of the pledged 1.164 million bpd, which equates to 89% compliance, up from 84% in July.  Saudi Arabia cut its supply to 9.98 million bpd due to lower exports.  


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $47.10, down 13 cents

RBOB - Oct $1.7298, down 4.92 cents

HO - Oct $1.7216, down 2.02 cents


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Gasoline futures hit two-year high after Tropical Storm Harvey put 23% of US production offline

August 31, 2017

Recap: With Tropical Storm Harvey putting 23% of U.S. production offline, September gasoline futures rose to a new two-year high of $1.9231. Wednesday’s trading marked the seventh straight session that this soon-to-expire contract posted gains, and in turn, widened its premium to the October contract. Since news broke that Harvey could reach Category 4 status, the September/October RBOB spread as widened 180%. While the September contract typically factors in a summer grade premium, Harvey has raised concerns of shortfalls of this grade, and in turn, tacked on another 10 to 15 cents to its premium over the October contract. Harvey has also added a significant premium to the October contract over that of the November, which is the same grade. This spread has widened by 293% during the same time period. The September/October spread settled at 24.42 cents and the October/November spread settled at 12.27 cents.

September RBOB settled at $1.8847 a gallon, up 10.14 cents, or 5.6%, while heating oil for September delivery gained .0083 cents, or 0.49% to settle at $1.6738 a gallon

Despite a 5.4 million barrel draw in U.S. crude oil stocks, oil prices fell for the fourth straight session. October WTI fell as much as 1.2% before slightly paring losses for a settlement at $45.96 a barrel, down 48 cents, or 1.03%. Brent for October delivery settled at $50.86, down $1.14, or 2.19%.

Fundamental NewsThe EIA reported that US gasoline demand increased to an estimated 9.846 million bpd in the week ending August 25th, a record high.  It reported that refinery utilization rates increased to 96.6% last week, the highest percentage since August 2015. 

The US Department of the Interior’s Bureau of Safety Environmental Enforcement said about 18.5% of oil production in the Gulf of Mexico was shut in on Wednesday due to Tropical Storm Harvey.  It said 323,760 bpd out of 1.75 million bpd was shut in. 

Tropical Storm Harvey has shut in production at refineries along the US Gulf Coast, prompting competition between customers in New York and Mexico for alternate supplies.  Refiners in Europe may benefit from greater demand for their fuels.  The US East Coast is not expected to suffer supply shortages due to healthy inventories.  However, inventories may decline as Colonial Pipeline reduces its rates.  The region depends on 500,000 to 600,000 bpd of European imports and may need more as Mexico faces refinery shutdowns and also seeks more supplies from Europe. 

The EPA said it has expanded fuel waivers for gasoline in response to requests from states to minimize potential supply shortages from Tropical Storm Harvey.  The waiver applies to Alabama, Louisiana, Texas, Georgia, Kentucky, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Florida and Washington D.C.

Senator Edward Markey urged President Donald Trump to tap the country’s emergency gasoline or crude oil reserves to alleviate motor fuel price spikes resulting from Tropical Storm Harvey. 

The Explorer Pipeline shut its main fuel line from Houston, Texas to Tulsa, Oklahoma as supplies decline amid refinery closures caused by Tropical Storm Harvey.  Its Tulsa to Chicago line will also shut down later on Wednesday due to a lack of product to pump.   

Buckeye Partners said it restarted processing and marine terminals in Corpus Christi late Tuesday.  Meanwhile, the Port of Beaumont is currently closed and there is no vessel movement from the port.  However, it is expected to reopen in 2-3 days.  

TransCanada’s 700,000 bpd Marketlink pipeline from Cushing, Oklahoma to Port Arthur, Texas was reportedly closed on Tuesday.  TransCanada did not respond to a request for comment, however, a source with knowledge of the situation confirmed the pipeline was shut. 


Early Market Call - as of 9:35 AM EDT

WTI - Oct  $46.58 up 62 cents

RBOB - Sep $2.0416 up 15.69 cents

HO -Sep $1.7000 up 2.62 cents


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Gasoline prices continue to gain as forecasts predict Tropical Storm Harvey to regain strength

August 30, 2017

Recap:  Gasoline prices in the U.S. continued to gain, posting new highs as we approached the settlement period. On what appeared to possibly be the first down day out of the last six, prices quickly reversed course as forecasts predicted for Tropical Storm Harvey to regain strength as it approaches Port Arthur, TX, home of the largest U.S. refinery. September RBOB began a steady midday climb, rising more than 5% off of the day’s lows. This spot contract settled at $1.744 a gallon, up 3.2 cents or 1.8%. September heating oil tacked 1.6 cents, or 1%, to $1.651 a gallon.

U.S. oil prices fell to a one month low on Tuesday, as refineries in the Gulf of Mexico remained offline due to Tropical Storm Harvey, raising concern that demand for crude oil will dissipate. WTI fell below $46 a barrel for the first time since July 25th, however, losses were pared as traders prepped for the EIA report due out Wednesday morning. October WTI settled at $46.44 a barrel, down 13 cents, or 0.28%, while Brent for October delivery finished up 11 cents, or 0.21%, to settle at $52 a barrel.

Fundamental News:  The IEA said record oil and refined product stocks will cushion potential shortages caused by Hurricane Harvey.  It added that it could release emergency oil stocks in the event of extended outages.  The head of IEA’s Oil Markets Division, Neil Atkinson, said the IEA and the DOE continue to assess the damage but it is too early to say what action, if any, would be needed. 

The Bureau of Safety and Environmental Enforcement said 18.26% or 319,523 bpd of current oil production in the Gulf of Mexico has been shut in. 

Heavy rain and flooding from Tropical Storm Harvey threatened more oil refineries along the Louisiana coast after impacting refineries in Texas.  The storm moved back over the Gulf of Mexico on Monday, sending heavy rains from Houston through to Lake Charles, Louisiana.  The Gulf Coast is home to nearly half the US refining capacity, and nearly 2.7 million bpd or 15% of US refining capacity is already shut in.  Louisiana is home to about 3.3 million bpd of daily capacity while Texas has about 5.6 million bpd.  Exxon Mobil may begin shutting units as early as Tuesday at its 362,300 bpd Beaumont refinery due to high water in the plant.  Motiva cut production at its 603,000 bpd Port Arthur, Texas refinery due to flooding.  It has not made a decision about shutting down the entire refinery.  Citgo’s 425,000 bpd Lake Charles, Louisiana refinery has reduced its production due to crude oil shipping disruptions. 

Kinder Morgan initiated work to restart a 300,000 bpd crude and condensate pipeline in south Texas shut down in parts due to Tropical Storm Harvey. 

BHP has begun restarting wells and related midstream facilities in the western Eagle Ford Shale, where it and other operators shut in production ahead of Hurricane Harvey.

Union Pacific and BNSF Railway have suspended operations in the Houston area amid flooding related to Hurricane Harvey. 

Barclays stated that Tropical Storm Harvey will make it harder for OPEC to rebalance the oil market. 

Goldman Sachs stated that Tropical Storm Harvey is likely to lead to higher crude and product inventories over the next couple of months given the likely larger hit on US demand.  Based on past hurricanes and estimated outages, Harvey should increase US crude availability by 1.4 million bpd and remove between 615,000 and 785,000 bpd of gasoline and 700,000 bpd of distillate supplies. 

According to Bloomberg, crude stocks held in Cushing, Oklahoma increased by 200,000 barrels to 56.7 million barrels in the week ending August 18th. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct $46.07, down 37 cents

RBOB - Sep $1.6636, up 6.16 cents

HO - Sep $1.6842, up 3.02 cents


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Gasoline futures continue to rise as Tropical Storm Harvey forced closures of refineries along the Gulf Coast

August 29, 2017

Recap: Gasoline futures rose as much as 7% on Monday, as Tropical Storm Harvey continued to pelt Texas with high winds and torrential rains, forcing the closure of refineries along the Gulf Coast. September RBOB reached a high of $1.7799 a gallon, the highest level for a spot contract in over two years. After the covering scramble abated, gains were substantially trimmed, with the soon to expire September contract falling by as much as 4.2% before regaining ground. This spot contract tacked on 4.57 cents, or 2.7%, to settle at $1.7123 a gallon. Heating oil for September delivery settled at $1.6352 a gallon, up 1.29 cents, or 0.79%.

Refinery shutdowns mean less demand for crude oil, leading to an adverse effect on the price of crude oil compared to that for a gallon of gasoline and heating oil. Also tempering a rise in oil prices is the fact that the U.S. is less dependent on offshore barrels due to a rise in shale production. October WTI fell as much as 4.2%, as it experienced its widest one day range in a little over a month. Pressure in WTI widened its discount to Brent, with the October spread settling at $5.32, the widest discount for the spot month spread since August of 2015.  October WTI shed $1.30, or 2.72%, to settle at $46.57 a barrel. Brent for October delivery fell 52 cents, or 0.99%, to settle at $51.89 a barrel.

Fundamental News: The US National Hurricane Center said Hurricane Harvey, which hit Texas as a Category 4 storm late Friday, was moving away from the Texas coast but was expected to linger close to the shore through Tuesday.  It said floods would spread from Texas eastward to Louisiana. 

The US Bureau of Safety and Environmental Enforcement said about 18.94% or 331,370 bpd of Gulf production was idled due to the storm as of Monday afternoon. 

According to S&P Global Platts, nearly 2.2 million bpd of refinery capacity in Texas was shut down due to Hurricane Harvey as of Sunday.  It is nearly half of Texas’ total 4.94 million bpd of capacity.  Among the refineries shut down were ExxonMobil’s 560,500 bpd Baytown refinery, Valero’s 293,000 bpd Corpus Christi, Texas refinery, Citgo’s 157,500 bpd Corpus Christi refinery, Flint Hills’ 296,470 bpd Corpus Christi refinery, Magellan’s 50,000 bpd Corpus Christi refinery, Buckeye’s 50,000 bpd Corpus Christi refinery, Shell’s 340,000 bpd Deer Park, Texas refinery, Petrobras’ 112,229 bpd Pasadena, Texas refinery, Phillips 66’s 247,000 bpd Sweeny refinery and Valero’s 89,000 bpd Three Rivers refinery.  In addition to the refineries, about 22% or 380,000 bpd of offshore production has been shut in, while 830 bcf/d of natural gas production has been shut in.  According to the Texas Railroad Commission, about 300,000 to 500,000 bpd of Eagle Ford oil output has been shut. 

The US Energy Department has decided not to release oil from the SPR because ongoing conditions due to Hurricane Harvey make it impossible.  However, it stated that it stands ready to provide assistance as deemed necessary, to include any release of the SPR.   

The IEA said there was no need for now to release fuel from emergency stockpiles to compensate for disruption caused by Hurricane Harvey because global oil markets are well supplied. 

Goldman Sachs analysts said gasoline and distillate product refining margins are likely to increase further in the wake of Tropical Storm Harvey.  It estimated that the storm would increase domestic crude availability by about 1.4 million bpd because of refinery shut-ins.  However, it cut gasoline supplies by 615,000 to 785,000 bpd and reduce distillate supplies by 700,000 bpd. 

Venezuela’s Oil Minister, Eulogio del Pino, will visit Russia and Saudi Arabia ahead of a joint OPEC, non-OPEC monitoring ministerial committee meeting in Vienna on September 22nd.

Early Market Call - as of 9:00 AM EDT

WTI - Oct  $46.43, down 14 cents

RBOB - Sep $1.7369, up 2.42 cents

HO -Sep $1.6543, up 1.9 cents

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Hurricane Harvey shuts in approximately of 15% of US's refinery capacity over the weekend

August 28, 2017

Recap: Gasoline prices were all over the place after Tropical Storm Harvey was upgraded to a Category 3 storm. The spot futures contract experienced its widest one day trading range so far this year, as it traded at its highest level in over 5 months. The run-up in gasoline put gasoline crack spreads at their strongest level in 5 years for this time of year, while at the same time, moved the spot spread out to a 2 year high. September RBOB finished up less than half a cent, or under 0.2%, to end at $1.667 a gallon, up 2.6% on the week. September heating oil settled at $1.6254, unchanged on the day, however, up 0.30% on the week.  It appears that most traders covered positions in oil on Thursday, rather than waiting until Friday, with October WTI trading in a much narrower range under lighter volume. This spot contract held above yesterday’s low, spending most of the session hovering around $47.73, the 10-day moving average for this contract. Prices recaptured some of Thursdays losses made in response to Tropical Storm Harvey, with October WTI tacking on 44 cents, or 0.93%, settling at $47.87 a barrel. October Brent settled at $52.41 a barrel, up 37 cents, or 0.71%.

Fundamental News: Hurricane Harvey strengthened into a Category 3 storm with winds of 120 mph on its path towards the Texas coast and is forecast to become the strongest storm in 12 years, according to the National Hurricane Center.  The hurricane is expected to make landfall late Friday or early Saturday between Corpus Christi and Houston.  It is expected to move slowly and linger over Texas for days.  The US Department of the Interior’s Bureau of Safety and Environmental Enforcement reported that about 22% of US Gulf of Mexico oil production is offline.  It equates to about 377,117 bpd, out of 1.75 million bpd produced from the Gulf.  About 86 platforms have been evacuated, so far.  Oil refiners in the Gulf Coast started halting operations on Thursday amid warnings of floods and storm surges.  The Port of Corpus Christi has been shut in preparation for Hurricane Harvey.  The Houston Ship Channel was also closed off on Friday to both incoming and outgoing vessels.  ConocoPhillips said it suspended all operations and shut-in production in the Eagle Ford shale region of Texas due to Hurricane Harvey.  Offshore, ConocoPhillips evacuated some personnel from platforms but does not expect any impact on production from the storm.  BHP Billiton shut down drilling and completion activities at its Eagle Ford shale operations.  Kinder Morgan has started shutting down parts of its KMCC pipeline system for crude and condensate, its Double Eagle Pipeline, several gas storage facilities and compressor stations due to Hurricane Harvey.  Buckeye Partners started shutting down its Corpus Christi facilities due to Hurricane Harvey.

Baker Hughes reported that oil companies cut the number of rigs searching for oil for a second consecutive week ahead of Hurricane Harvey.  Driller cut four oil rigs in the week ending August 25th, bringing the total count down to 759. 

IIR reported that US oil refiners are expected to shut in 570,000 bpd of capacity in the week ending August 25th, cutting available refining capacity by 319,000 bpd from the previous week. 

Intermittent elevated flaring was observed at Valero’s 100,000 bpd Three Rivers refinery on Thursday night.  The refinery is shutting down ahead of Hurricane Harvey.  Separately, all monitored units at Valero’s 210,000 bpd Corpus Christi West refinery were shut on Thursday night.  Also, almost all units at Valero’s 115,000 bpd Corpus Christi East plant were shut on Thursday, including the 115,000 bpd crude section.  All monitored units at Flint Hills’ 230,000 bpd Corpus Christi West refinery were shut down on Thursday evening ahead of Hurricane Harvey.  Also, all monitored units at Flint Hills’ 60,000 bpd Corpus Christi East plant were shut down.  Several units at Citgo’s 165,000 bpd Corpus Christi, Texas refinery were shut on Thursday evening, including a 165,000 bpd crude section and 44,000 bpd coker unit ahead of Hurricane Harvey.


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $47.49, down 38 cents

RBOB - Sep $1.7380, up 7.1 cents

HO -Sep $1.6535, up 3.21 cents 

Hurricane Harvey shut in about 15% of the country's refinery capacity over the weekend.


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Refineries along Texas coast begin shutting down in anticipation of Hurricane Harvey

August 25, 2017

Recap: Gasoline was the big mover today, buoyed by the upgrading of Tropical Storm Harvey into a Category 3 hurricane before it is set to hit the coast of Texas late on Friday into early Saturday. With refineries along the coast shutting down, September RBOB rose to a three week high of $1.6764 a gallon, before settling at $1.664 a gallon, up 4.5 cents, or 2.8%.  The October RBOB/WTI crack spread moved out today, widening by $1.83, or 11.6%, to settle at $17.59. September heating oil settled at $1.621 a gallon, down less than half a cent.

With the shut in of refineries, demand for crude oil is expected to fall off, which in turn put pressure on oil prices. October WTI fell as much as $1.35, or 2.7%, to a low of $47.06. Traders continue to be skeptical about OPEC’s efforts to eat away at the global supply glut in the face of rising U.S. production, which currently sits at two year highs. While they continue to sort out price direction, choppy trading is likely to continue. October WTI finished the session at $47.43 a barrel, down 98 cents, or 2%, while October Brent slipped 53 cents, or 1%, to settle at $52.04 a barrel.

Fundamental NewsUS gasoline margins increased by more than 5% early, while diesel margins also increased on Thursday as Hurricane Harvey threatens the Gulf Coast.  Royal Dutch Shell, Anadarko Petroleum and ExxonMobil are cutting some oil and gas production in the Gulf of Mexico ahead of Hurricane Harvey, expected to hit the Texas coast later this week.  Shell cut production at its Perdido platform and evacuated the facility.  It also evacuated staff and shut its Galveston 209 platform and was shutting in its Hadrian South subsea production system in the US Gulf of Mexico.  Anadarko said it was removing nonessential staff from some platforms while ExxonMobil said it was cutting output at its Hoover production ahead of the storm.  ConocoPhillips was suspending drilling in the Eagle Ford shale oil region of Texas and idling five rigs.  The US National Hurricane Center said Tropical Storm Harvey strengthened into the third hurricane of the 2017 Atlantic season on Thursday afternoon and is expected to strengthen into a Category 3 hurricane before hitting the Texas coast late Friday or early on Saturday.  It would be the first hurricane to strike Texas since 2008.

The Bureau of Safety and Environmental Enforcement said that about 9.56% of current Gulf of Mexico oil production has been shut in, equating to 167,231 bpd, in preparation for Hurricane Harvey. 

Magellan Midstream Partners said it suspended operations at its terminal and condensate splitter in Corpus Christi ahead of Hurricane Harvey. 

Citgo Petroleum is shutting down its 157,000 bpd Corpus Christi, Texas refinery as Hurricane Harvey approaches. 

Flint Hills Resources will shut down operating units at its 296,470 bpd Corpus Christi, Texas refinery in preparation for Hurricane Harvey. 

A joint OPEC, non-OPEC monitoring ministerial committee said it was confident the oil market was moving in the right direction but that all options, including an extension to the supply-cut agreement beyond March, were open to ensure market stability.  It said it will continue to monitor other factors in the oil market and their influence on the ongoing market rebalancing process.  The next JMMC meeting is scheduled for September 22nd in Vienna.  The committee plans to invite Libya and Nigeria, which are both exempt from the output cut agreement, to the next meeting of the ministerial or the technical joint panels. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $47.63, up 20 cents

RBOB - Sep $1.7170, up 5.35 cents

HO -Sep $1.6385, up 1.73 cents


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Oil prices rose after EIA reported a 3.3 million barrel decline in US crude oil inventories

August 24, 2017

Recap: After the EIA reported a 3.3 million barrel decline in U.S. crude oil inventories, oil prices rose, extending Tuesday’s gains. Although the decrease was less than the expected 3.7 million barrel decline, it was the eighth straight week that stockpiles fell. October WTI rose above $48 a barrel, trading most of the session within a 14 cent range of $48.37 and $48.23. Prior to the settlement period, prices slightly jumped, before settling at $48.41 a barrel, up 58 cents, or 1.21%. Brent for October delivery tacked on 70 cents, or 1.35%, to settle at $52.57 a barrel. 

September RBOB gained 2.8 cents, or 1.8%, to $1.619 a gallon, while September heating oil rose 3.3 cents, or 2.1%, to $1.624 a gallon.

Fundamental NewsRoyal Dutch Shell said it was taking steps to secure its assets in the western Gulf of Mexico in preparation for severe weather.  There was no current impact to production, adding that it was continuing to monitor developments related to the remnants of former Tropical Storm Harvey.  The US National Hurricane Center said Harvey has regenerated into a tropical depression and could strengthen further in to a hurricane on Friday.  It should be approaching the Texas coast late Friday.   

The US Energy Department is accepting bids for 14 million barrels of sour crude from its oil reserves until August 30th.  The delivery period is from October 2nd to November 30th.  The sale is the first for fiscal year 2018.  The DOE is expected to sell at least another 10 million barrels during fiscal year 2018.

Libya’s 280,000 bpd Sharara oilfield remained offline on Wednesday despite efforts the previous day to restart it.  Libyan security forces opened a valve that had been shut for three days on the pipeline, however, the pipeline still remained shut in.  The field was initially shut on Saturday after a group blocked a pipeline linking it to the Zawiya oil terminal. 

The Petroleum Association of Japan reported that the country’s crude oil stocks in the week ending August 19th increased by 8.09 million barrels on the week but fell by 2.99 million barrels on the year to 89.05 million barrels.  Japan’s gasoline stocks increased by 420,000 barrels on the week and by 750,000 barrels on the year to 10.76 million barrels, while its kerosene stocks increased by 1.4 million barrels on the week but fell by 1.39 million barrels on the year to 14 million barrels.  Japan’s crude runs increased by 80,000 bpd on the week and by 60,000 bpd on the year to 3.43 million bpd.  Japan’s total oil product sales fell by 20.8% on the week and by 10.1% on the year to 1.95 million bpd. 

The Fujairah Oil Industry Zone reported that its light distillates stocks increased by 371,000 barrels to 6.787 million barrels in the week ending August 21st while its middle distillate stocks fell by 852,000 barrels to 3.187 million barrels and its residual fuels stocks fell by 1.348 million barrels to 10.711 million barrels on the week. 

IIR reported that US oil refiners are expected to shut in 270,000 bpd of capacity in the week ending August 25th, cutting available refining capacity by 19,000 bpd from the previous week.  IIR expects offline capacity to fall to 24,000 bpd in the week ending September 1st. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $47.91, down 50 cents

RBOB - Sep $1.6443, up 2.52 cents

HO -Sep $1.6313, up 66 points


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Oil prices rebounded on expectations of a 3.5 million barrel draw in US crude oil inventories

August 23, 2017

Recap:  Oil prices rebounded on Tuesday as traders awaited the release of U.S. inventory numbers, which are expected to show a 3.5 million barrel draw in U.S. crude oil inventories. The expiration of the September WTI contract also provided strength, as shorts had to cover.

Since the middle of June, prices have been stuck in a range between $42.00 and $50.00. Support has been provided by the proposed output cuts from within OPEC and some other major producers, while rising U.S. production has kept prices below $50.00. WTI settled at $47.64 a barrel, up 27 cents, or 0.57%. October Brent tacked on 21 cents, or 0.41%, to settle at $51.87 a barrel. 

September RBOB finished close to unchanged, settling at $1.5908 a gallon, up less than half a cent, or 0.4%. Heating oil for September delivery gained 2 cents, or 1.3%, to settle at $1.5912 a gallon.

Fundamental News Bloomberg reported that crude oil stocks held in Cushing, Oklahoma increased by 300,000 barrels to 57.3 million barrels in the week ending August 18th.

Kuwait’s Oil Minister, Issam Almarzooq, said OPEC and non-OPEC producers will discuss whether to extend or end their crude output cut agreement after it expires in March at an OPEC meeting on November 30th.  He said the group is still working to cut global oil inventories below a five-year average.  He said the cuts are working well, but shale production gains are limiting an oil price gain. Separately, sources stated that the next meeting of a ministerial committee of OPEC and non-OPEC states monitoring compliance with their pact to cut output has been proposed for September 22nd in Vienna.  The proposal is awaiting approval by the ministers on the panel, which includes Kuwait, Algeria, Venezuela and non-OPEC Russia and Oman. 

Libya’s Sharara oilfield was gradually restarting on Tuesday after repeated disruptions causing production shutdown.  Earlier on Tuesday, the National Oil Corp announced that it shut the pipeline hours after reopening it following a three-day shutdown due to a pipeline valve shut-in.  The shutdown was due to action by a different group to the one that caused a closure at a valve leading from Sharara to Zawiya terminal on Saturday.  Libya’s National Oil Corp said it lifted a force majeure on loadings of Sharara crude from the Zawiya oil terminal. 

Saudi Arabia’s oil exports to US Gulf Coast refiners in early August fell to 264,000 bpd after falling by 32% on the year to 469,000 bpd in July, according to US customs data. 

Exports of Venezuelan crude, the main source of income for the country, fell 24% in the first half of August, increasing concerns that the country will not be able to make $3.53 billion in upcoming debt payments.  Tankers loaded 1.27 million bpd of Venezuelan crude from August 1st to August 15th, down from 1.68 million bpd in the same period last year. 

According to customs data compiled by Bloomberg, the Gulf Coast led a decline in preliminary US waterborne crude imports last week, falling by 344,400 bpd to 2.37 million bpd.  Total US imports fell by 163,700 bpd to 4.36 million bpd in the week ending August 18th. West Coast imports increased by 297,800 bpd while East Coast imports fell by 177,100 bpd to 760,800 bpd.  Total crude and product imports fell by 569,500 bpd to 5.65 million bpd. 

Western Canadian crude storage levels increased in July and August.  According to Genscape, inventories at monitored storage locations in Western Canada increased by 3.4 million barrels between the weeks ending July 7th and August 11th.  Storage levels increased four out of the five weeks. 


Early Market Call - as of 9:10 AM EDT

WTI - Sep $47.67, down 16 cents

RBOB - Sep $1.5907, down 1 point

HO - Sep $1.5968, up 52 points


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