Every time gas is getting ready to plunge to exciting lows, it seems something bad is bound to happen. RBOB futures (NYMEX:RBZ13) rallied on high drama on the high seas as well as drama on the ground! Word is that tankers were being diverted from New York Harbor to Florida as refiners are running behind on maintenance because they needed to get gasoline supply to meet contractual obligations. That lent support ahead of what would be a bullish Energy Information Administration report, at least as far as gasoline was concerned. Then gas exploded after a natural gas (NYMEX:NGZ13) pipeline did the same raising fears that a nearby liquids pipeline would also be impacted. Add to that some refining glitches and RBOB rocked the entire complex.
The Chevron gas pipeline explosion in Milford, Texas ultimately did not impact products as the pipeline would have been more at risk if they tried to shut it down. The company said that the oil kept the pipeline cooler so it did not impact flow. Still the episode did bring crude oil back from the dead even after a very bearish number from the Energy Information Administration report. The Energy Information Administration also reported strong demand. As tankers are being diverted the Brent Crude continued to soar. U.S. gasoline demand is rebounding coming in 4.7% above a year ago. Gas stocks fell by 838,000 barrels.
Crude was one market that seemed to ignore a wildly dovish Janet Yellen. That may be because someone just happened to look at the supply. The Energy Information Administration reported that crude stocks increased by 2.6 million barrels. That blew away expectations. Yet soaring RBOB and concerns over the pipeline fire had shorts stat to cover.
Distillate demand is also strong running 6.9% above year ago levels. Harvest demand and chilly weather conspired to support the market. Overall supply was off 481,000 barrels last week. But help may be on the way. A big jump in refinery runs of 1.9% to 88.7% means refiners are coming out of maintenance! With strong margins we should see the supply of product start to bottom! Refiners are getting ready to run!