Diesel Prices Slide As Storm Activity Intensifies And Refinery Issues Heighten Market Risks

Diesel prices are leading the energy complex lower to start Tuesday’s trading, down 3 cents for the day so far, but still hovering in the relatively tight range that’s held prices since the August 1st collapse. If the bottom end of this range (around $2.24) breaks there’s a strong technical argument for prices to slide another 10-15 cents/gallon in the next week or two. RBOB gasoline futures are resisting the pull lower for the moment, losing only about 60 points so far, but their charts suggest a similarly precarious picture that sets up for another test of sub $2 values if prices don’t rally soon.

The National Hurricane Center is tracking 3 storm systems this morning, after briefly watching 4 systems Monday. Tropical Storm Erin is the biggest threat with forecasts suggesting it will become a major hurricane by the weekend as it heads towards the US. Fortunately both the Euro and US models both still project the storm will hook north before reaching the US coast, meaning the only threats at this point are likely to be rough water and currents. Another system of thunderstorms near the US Gulf Coast is given 0% odds of developing, but is still expected to bring heavy rain to the region.

Right on cue: Total reported that thunderstorms near its Port Arthur TX refinery caused flaring at 3 different units, with at least one unnamed unit knocked offline during a 7 hour disruption Monday morning.

P66 reported an upset at its Borger TX refinery Sunday that impacted a hydrotreating unit. The cause of that upset which lasted 21 hours was not reported.

The never-ending saga? A month ago Dalinar Energy (a partnership including several mining firms and 2 subsidiaries of Koch) was recommended to be the winner of the most recent Citgo auction. Yesterday there were new reports that Dalinar owner Gold Reserve was issuing filings to try and prevent a Vitol subsidiary from overtaking its bid. The latest recommendation from the court is due next week.

Today’s interesting read: A Reuters article on why SAF promises aren’t coming true.

Today’s troubling read: Pakistan’s Army chief threatened India’s Jamnagar refinery during a trip to the US this week. That refinery is the largest in the world, and a key importer to California which means it will only become more important once the state loses 2 more refineries in the coming months.