Energy Markets Mixed As Gulf Storm Looms And California Seeks Refinery Buyer

Energy markets are mixed so far this morning with diesel futures shedding nearly 1% in pre-market activity while WTI trades up over 1%, pulling the gasoline contract higher along with it.

The system the NOAA is tracking seems to be following the same path as last week’s Invest 93L and is forecasted to drench Louisiana’s gulf coast over the next could days. As of now the storm is only given a 10% chance to organize into a depression over the next week, and will likely dissipate quickly once it makes landfall. Outside of novel flooding, this storm’s potential impact on refineries in the area seems to be minimal at this time.

California love? The state is seeking buyers for Valero’s Benicia refinery which is currently slated for closure next April. Staring down the barrel at an estimated 17% reduction in gasoline supply by this time next year, the California Energy Commission is looking for a refiner to step in keep the bay area plant running. HS Sinclair, who was reportedly in talks to acquire the refinery a year ago, was likely the CEC’s first call.

On the DOE report:
Crude drew on several factors but mainly demand spiking to a 2025 high; production also dipped below 2024’s seasonal level for the first time this year. Looks like the partial shut down of P66’s Bayway refinery is showing up in the PADD 1 refinery runs, although not as big of a slide as taking the entire plant down for two months. Throughput increases elsewhere led to a bump in total runs, holding them and the total utilization rate well above their 5-year seasonal ranges.

Diesel stocks hit a 3 month high despite increased exports but are still below the 5-year range in PADDs 1, 2, & 5 as demand dips for a third consecutive week. PADDs 3 & 4 aren’t quite as low but are under average levels and below the past two years. Gasoline inventories drew on down exports and increased demand. Most of the draw is attributed to PADD 1’s 3.25 million barrel decline, which was partially offset by healthy increases in PADD’s 3 & 5. West Coast stocks have run below their 5-year range essentially all year but have increased in 9 of the past 10 weeks to reach a 5-year seasonal high.