Conflicting Signals For Both Supply And Demand

Energy markets are bouncing to start Wednesday’s session, wiping out most of Tuesday’s losses as headlines and charts all provide conflicting signals for both supply and demand.

Reports that OPEC was moving up its timeline for a committee meeting to discuss output quotas in July was seen as bearish for markets Tuesday, but have since been shrugged off as prices continue their choppy consolidation pattern.

Iran has also indicated it is ready to compromise with the U.S., which would add even more supply to a global market that doesn’t really need it, but given the numerous head fakes in those negotiations, the market doesn’t seem to be too concerned about that news this AM.

Motiva reported an upset at its 635mb/day Pt Arthur refinery (the 2nd largest in the U.S.) that started Monday afternoon and lasted 24 hours, affecting multiple units. The upset was caused by “an overspeed trip of the Lift Air Blower (LAB) at the Fluid Catalytic Cracking (FCCU), which resulted in flaring at the Alky and FCCU flare stacks.” U.S. Gulf Coast gasoline basis values did tick modestly higher Tuesday, although reactions in the world’s most liquid refined product market are much more muted than other regions in which a refinery employee sneezing can cause more movement than the 50 point increase we saw yesterday. The modest tick higher in USGC gasoline diffs and a slip in NYH RBOB basis also combined to push values for Colonial Line 1 space lower after they reached a 6 month high last week.

The bidding window for Citgo has been extended (again) after a U.S. Federal Judge added at least one week to the deadline. The results of this latest round of bidding will be announced in July.

Exxon continues its recent pattern of European refining divestments, with reports this morning that the company is selling its stake in French Esso, which includes the Gravenchon refinery and a SAF subsidiary to a Canadian firm North Atlantic France SAS. A statement from North Atlantic, who is relatively unknown as a fuel distributor and retailer in Canadian provinces of Newfoundland, Nova Scotia and Prince Edward Island, says the company plans to develop the Gravenchon facility into a green energy hub.

Reminder that the weekly inventory reports are delayed a day this week due to the holiday.