The energy complex will have its eye on the gas! That is whether or not Ben Bernanke decides to take his foot off of it or not! Humphrey Hawkins may overshadow what were a bearish American Petroleum Institute report as well as the latest gasoline spike caused by another refinery mishap. Buckle up for another wild ride.
RBOB (NYMEX:RBQ13) soared on rumors that a Canadian refiner was in the cash market buying product. Sure enough our refining nightmare continues and Bloomberg News confirmed it. That makes three refineries that serve the New York Harbor market have units shut or slowed. Irving Oil Corp. has shut multiple units, including two fluid catalytic crackers, at its St. John, New Brunswick, plant, Genscape Inc., a Louisville, Kentucky-based energy information provider, reported yesterday.
Barbara Powell, of Bloomberg news, wrote that, “Gasoline advanced to a four-month high on speculation that unplanned refinery outages may crimp fuel supply. Futures rose 1%. Phillips 66 said yesterday it’s making unplanned repairs on units at the Bayway refinery in New Jersey, adding to outages from Philadelphia to Texas. Gasoline inventories probably fell 1.5 million barrels last week, according to the median estimate of nine analysts in a survey by Bloomberg. Crack spreads widened and the August contract’s premium to September increased.”
As far as Ultra-low-sulfur diesel, Bloomberg reported that it jumped to a three-month high as declining European gasoil supplies and higher prices indicated more opportunities for U.S. exports. ULSD, for August delivery rose 2.08 cents, or 0.7%, to settle at $3.0469 a gallon on volume that was 10% below the 100-day average. ULSD’s crack spread versus West Texas Intermediate crude widened $1.19 to $21.97 a barrel. The premium over Brent increased 56 cents to $18.57. Gasoil for August delivery on the ICE Futures Europe exchange rose $3.25 to $919.75 a metric ton.
The API did try to offer some hope and relief by reporting a build in inventories of both gasoline and diesel. Reuters reports that “U.S. crude stocks fell last week as refineries raised output, while gasoline and distillate inventories jumped, data from industry group the American Petroleum Institute showed on Tuesday. Crude inventories fell by 2.6 million barrels in the week to July 12 to 371.056 million, compared with analysts' expectations for a decline of 2 million barrels. Crude stocks at the Cushing, Oklahoma delivery hub fell by 880,000 barrels, API said. Refinery crude runs rose by 84,000 barrels per day, API data showed. Gasoline stocks rose by 2.6 million barrels, compared with analysts' expectations in a Reuter’s poll for a 500,000 barrel draw. Distillate fuels stockpiles, which include diesel and heating oil, rose by 3.8 million barrels, compared with expectations for a 1.9 million-barrel gain, the API data showed.” So despite all of our refining issues we saw products gain. If the Energy Information Administration confirms this data then we should start to ease assuming Ben Betake doesn’t talk about more easing or assuming another refinery blows up.”
Natural Gas is getting support from the heat. Janice Dean, Fox News Weather analyst, says that “It’s officially summertime in the Northeast: The complaining about the heat is as relentless as the temperatures. But not only across the Northeast, the Great Lakes and Ohio Valley are dealing with temperatures in the 90s, with heat indices near or past 100 degrees. We could set some record highs while the humidity will make it feel pretty awful. Heat advisories are up for many big cities including New York and Philadelphia. And this is going to stay with us all week long, so please take precautions especially with the young ones and the elderly who need to be indoors as much as possible and hydrated. Meantime, an upper level low will bring some cooler temperatures over the Southwest and Southern Plains. Parts of Oklahoma and Texas could get 1-3 inches of rain which is great news for this drought stricken area, however too much of a good thing will bring flooding to the region.”