Commodities find a disinflation fighting Fed supportive

Disinflation Fighters!

RBOB prices (NYMEX:RBU13) fell when Valero restated its Port Arthur, Texas, refinery.  Bloomberg reported “Conventional, 85-octane gasoline, or CBOB, on the Gulf Coast slid 1.75 cents to a discount of 21.75 cents a gallon versus New York Mercantile Exchange futures at 2:12 p.m., a second consecutive decline. Conventional, 87-octane gasoline also fell for a second day as it lost 1 cent to a discount of 12.75 cents a gallon, according to data compiled by Bloomberg.  Differentials widened after Valero began increasing a fluid catalytic cracker to planned rates at the 310,000-barrel-a-day Port Arthur plant.

The unit was first idled in early July and later began repairs after a valve problem was found, Bill Day, a company spokesman based in San Antonio, said in e-mails. The unit’s restart may add to inventories already near a six-month high on the Gulf Coast, the region known as PADD 3. Stockpiles of gasoline in the area increased 1.5 million barrels to 78.4 million in the week ended July 26, the most since Feb. 8, Energy Information Administration data showed. Shipments from the Gulf Coast to Chicago on Enterprise Products Partners’ (EPD) TE Pipeline are delayed by as many as 20 days after shippers flooded the Gulf with supply, the company said in a shipping bulletin July 29. 

Reuters is reporting that TransCanada’s plan to build one of the world's longest oil pipelines has reverberations far beyond Canadian shores. The planned 2,700 mile pipeline, which will bring crude from Canada's energy capital of Alberta to refineries and ports on the East Coast, has the potential to upturn the dynamics of the North Atlantic oil trade squeezing out some imported crude to North America and revitalizing once-ailing refineries. The Energy East line could also reinforce North Sea Brent crude as the world's oil benchmark against which giants such as Saudi Arabia price their western-bound exports, analysts say, while opening up the option of more Canadian heavy crude flowing to the U.S. Gulf Coast.

The scale of the $12 billion, 1.1-million barrel per day (bpd) pipeline, which will extend part of an old natural gas line, is hard to understate. Were it to start in London, it would stretch all the way to Tehran. In the United States, it could pump crude oil from Beverly Hills to New York City. And its capacity is greater than the entire oil production of Azerbaijan, could provide 6% of daily U.S. oil consumption or, put another way, has the ability to carry 30% of Canada's total daily oil production. 

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About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at Learn even more on our website at


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