Crude oil prices are still reacting to the post Hurricane Harvey recovery efforts. Crude prices surged as refiners start to come back online and nervous buyers in Asia start to buy up oil supply. Reuters reported that the spread between Brent and WTI is causing some big Asian buying as refinery shutdowns in the aftermath of Harvey pushed the spread between West Texas Intermediate crude and Brent crude to the widest in two years at nearly $6 a barrel.
The U.S. refineries are coming back and believe it or not, so is oil production and gas production. Last week Valero Energy restarted two Galveston refineries and are now back to normal production rates. Yet, just as the industry starts to recover, more storms are going to create havoc.
The U.S. dollar is mixed against majors after staging a comeback late in the week. The USD regained some ground even though the biggest indicator in the market the U.S. non farm payrolls (NFP) report disappointed by adding less than the expected number of jobs (156,000 versus 180,000) but the data point that had more significance was the low pace of growth of wages at 0.1%. A third rate hike for U.S. interest rates could be pushed back to next year if inflation does not pick up convincing the Federal Reserve.
After yesterday’s RBOB gasoline futures expiration blowout, the Trump Administration is pulling out all the stops to try to reduce shortages of gasoline and try to calm down soaring prices. Driven by massive refinery outages and fears of deliverable supply, gas was on high octane. The September RBOB gasoline futures surged at one point higher by more than 28 cents a gallon, driving the wholesale price of gasoline to the highest level in over two years.
The official U.S. monthly non-farm payrolls report will be released on Friday, Sept. 1. Due to the fact that some of the key leading indicators will be released after the NFP, it is even more difficult to predict this month's headline figure with any reasonable degree of confidence.
A shut down of the Colonial Pipeline in addition to the Explorer Pipeline and an explosion at a chemical plant is adding to the heartbreaking human suffering that is being experienced along out nations Gulf Coast.
RBOB gasoline futures are on the rise for the seventh day in a row as it has been confirmed that the Colonial Pipeline is running at reduced rates, raising the real possibility of gas and diesel and even jet fuel shortages. Colonial Pipeline Co. said Tropical Storm Harvey affected its Houston origin, which includes Pasadena, Houston, and Cedar Bayou.
For the U.S. energy industry, the relentless nature of this storm provides challenges unlike anything they have seen before. Despite almost insurmountable logistical challenges, the U.S. energy industry was already making amazing steps to try to start bringing refineries back on line. Yet will their efforts be thwarted as Tropical Storm Harvey gets ready for another go around and will the storms force the shutdown of the country’s largest refinery and shut down even more production.
The U.S. dollar is lower against most majors as the central bank summit in Jackson Hole kicked off. The Euro has regained January 2015 levels on Friday. Fed Chair Janet Yellen, in what could be her last appearance at the Wyoming gathering as chief of the U.S. central bank, focused on financial regulation with limited comments on monetary policy.