Afternoon Energy Highlights


Afternoon Energy Highlights

Outlook: Tropical storm Imelda has brought more than two feet of rain in some areas along the coast of Texas. This has caused several refineries to shut down or slow production in response to flooding in the region. Crude and diesel have moved slightly higher after the close, likely in response to news that’s continuing to come out of the U.S. Gulf Coast. Any shutdowns or production losses are likely to be short lived.  

Crude

  • Saudi Arabia's ability to prevent a global oil supply squeeze will become clear in a few weeks, because for now its crude in storage can fill the gap as they fulfill their supply commitments. It is estimated that they have about 180 million barrels held in storage locally and abroad. A lack of transparency from the Kingdom has not relieved much if any supply anxiety from the market.
  • The Saudi Minister of State for Foreign Affairs stated that complacency towards Iran will encourage it to commit further hostile acts. Iranian President Rouhani said that any military action against the country would draw an immediate response from Tehran. Iran has denied any involvement in the recent attacks on Saudi Arabia.
  • Philips 66 has stated that its refining operations in the Gulf remain routine despite flooding in the region. This comes as Exxon shut down it’s Beaumont Texas refinery this morning, and other refineries in the area have cut production due to the heavy rains.
  • Energy Transfer’s Nederland terminal has been shut down due to flooding caused by Tropical Storm Imelda. The terminal has a 1.5 million bpd of crude export capacity.
  • Iraq’s State Organization for the Marketing of Oil (SOMO) has denied the report that Saudi Arabia had asked it for crude supplies for its domestic refineries.
  • The Baker Hughes rig count will be released tomorrow at noon CT. Trade is looking for total rigs to fall 5-6 from last week. Oil rigs are expected to fall 3-4 week on week to 729.
  • As of 3:15 pm CDT: Brent crude $1.03 higher to $64.62, nearby e-mini S&P futures up .25 points at 3,006.50, while the US dollar index is 0.209 lower at 98.352.

Diesel

  • AAA is reporting the national average for the price of diesel at the pump at $2.990 per gallon compared to $2.948 a month ago and $3.183 during the same period last year.  
  • October ULSD closed today at $2.0049, up $0.0316, and currently trading at $2.0084.

 

Gasoline

  • AAA is reporting the national average for the price of gasoline at the pump at $2.601 per gallon compared to $2.667 a month ago and $2.571 during the same period last year. The highest recorded average prices were $2.845 during the great recession.
  • October RBOB closed this afternoon at $1.7007, up $0.0430. RBOB is currently trading at $1.6993.

Propane

  • Mont Belvieu propane traded at $0.4575, up a penny. Conway propane closed up $0.0175 at $.4075.
  • Propane is the fuel source for more than 60 million Americans. Using this nontoxic energy source helps cut emissions and protect the environment. Because propane vaporizes into a gas, the dangers of large volumes of liquid or residues entering the environment after a spill are eliminated. To learn more about safety click here.

Rainfall in the Gulf

 

 

Ryan Kelbrants Ryan.Kelbrants@chshedging.com