After A Heavy Sell-Off Monday, Gasoline And Diesel Futures Are Both Up 7 Cents Or More
After a heavy sell-off Monday, gasoline and diesel futures are both up 7 cents or more in early Tuesday trading as OPEC reminded the world that it’s still not coming to the rescue, and the tight refining capacity situation may get worse before it gets better. Stock markets are also showing signs of stabilizing with modest gains in the early going after another big selloff yesterday, which seems to be keeping the “risk off” sellers at bay.
OPEC’s monthly report lowered estimates for global GDP growth this year, but increased forecasts for fuel consumption in the back half of the year, predicting strong demand during the summer holiday and driving season in spite of record high prices. Despite the cartel’s plans to increase output every month, their actual crude oil production decreased in May as losses in Libya and Nigeria offset additional barrels pumped by Saudi Arabia and the UAE.
Bad news on refinery row? Lyondell announced in April that it was planning to shut down its 268mb/day Houston Refinery by the end of 2023, and last week a report suggested that closure would happen earlier if there was a disruption that required significant capital to fix. Today there are reports of a fire at that facility, so we may soon take yet another US refinery off the board if the damage is significant.
The NHC now gives 40% odds of development for a storm system in the Western Caribbean, but odds are much lower that this system will become a threat to refining country even if it does get a name.