Sandy can’t you see, that you will cause misery? The refiners made a start but now you could tear them apart. Oh please, go out to sea!
Hurricane Sandy is far from a dandy, threatening to be one of the worst storms in history. Because it will blow away ghosts and goblins it is being called the “Frankenstorm.” It will also blow energy demand. Already oil prices were under pressure as downgrade rumors swirled and we took another hit after Apple had lousy earnings. Who knew iPads ran on oil? Really, they blamed rising commodity costs and increasing competition.
Yet oil also took a hit on rumors. Some thought that Fitch was going to downgrade the U.S. and some thought every country in Europe despite the fact that the market has already done that. Fitch of course has warned that a U.S. downgrade could be coming if the U.S. did not get their fiscal house in order. Yet if Fitch did decide to do this right before an election in the U.S., they would be widely criticized as trying to influence the outcome of an election, which might mar the less than sterling reputation of credit rating agencies.
Overnight Spanish unemployment climbed to a fresh record in the third quarter as a deepening recession left one in four workers jobless, adding pressure to Prime Minister Mariano Rajoy to seek a second European bailout. Spain's unemployment, the second highest in the European Union after Greece, rose to 25.02% from 24.6% in the previous quarter, the National Statistics Institute said in Madrid today. That is the highest since at least 1976, the year after dictator Francisco Franco’s death led Spain to democracy. The euro-area average is 11.4%. Also Israel and Hamas agreed to a cease fire reducing some of the geo-political risk.
That brings us back to Hurricane Sandy. Already Sandy is impacting prices, production and imports. Oil prices are weaker as demand for oil should fall. East Coast refineries may shut down. Yet products are looking to gain ground as imports will drop and supplies of product, unlike crude, are very tight. Gasoline, which just had the largest drop since 1986, may rebound as Sandy disrupts the world. Bloomberg reported that the Buckeye Terminal has halted operations. They say the terminal will resume operations once Hurricane Sandy has passed and the facility is deemed safe for work. A skeleton crew will be staying at the facility through the storm. Buckeye Partners LP has suspended operations at the BORCO terminal in the Bahamas, Kevin Goodwin, a company spokesman, said. The terminal can hold 21.6 million barrels of crude, fuel oil and other refined products.