Energy Markets Are Attempting To Rally For A 2nd Day

Energy markets are attempting to rally for a 2nd day after mysterious coordinated explosions caused both Nordstream pipelines to leak and be shut down Tuesday. Although the reason for such an attack remains unclear, it did succeed in turning the market’s focus back on the supply challenges caused by the shooting war in Ukraine, and less on the demand challenges that are coming along with the global currency wars and plummeting stock market.

California gasoline basis levels surged to new record highs Tuesday, with both the LA and San Francisco spot markets trading at $2.45/gallon OVER futures. That puts cash prices in those markets around $4.80/gallon, and will push retail values north of $6, while several markets in the Gulf Coast region are seeing retail values below $3. While nowhere near as dramatic as the West Coast, Chicago basis values remain elevated after reports that the Husky refinery in Ohio will remain closed until December after the fire that killed two employees last week.

Hurricane Ian is beginning its battering of Florida after knocking out power to all of Cuba yesterday. A fortunate shift in the projected path overnight keeps the huge storm well to the south of Tampa bay, which keeps that critical port on the “clean” side of the storm and should help limit the damage to the fuel terminals sitting dangerously close to the water’s edge.   More than 10% of oil production in the Gulf of Mexico has been shut in as a precaution while the storm passes, but the system is far to the east of those rigs, and should not cause any damage.

Click here to download a PDF of today's TACenergy Market Talk.