Energy Prices Drifting Lower This Morning And Hurricane Helene Makes Landfall As Cat 4 Storm

Energy prices are drifting lower this morning with refined products, specifically diesel, leading the way, trading .8% lower to start the day. Oil bulls enjoyed a small bump earlier this week when China announced a sizeable stimulus package in an effort to stem deflation. However, demand concerns have remained pervasive from the world’s largest oil importer. Add that to the prospect of increased Libyan supply and WTI futures are set for its fourth consecutive week of losses.

Hurricane Helene made landfall in the Big Bend region of Florida overnight as a category 4 storm, lashing the coast with 140mph winds and leaving 3.5 million residents without power. Helene has since dissipated and disorganized into a tropical storm that’s expected to dump rain on Appalachia and into the Midwest through the weekend. While the petrochemical infrastructure along the Gulf Coast may have made it through this hurricane without major disruption, the NOAA is eyeing another round of cyclone development in the Caribbean, giving it a 30% chance of forming over the next week. The major difference being this system is expected to hook toward the West once it passes between the Yucatan and Cuba.

RIN prices climbed again yesterday, trading 3.5 cents higher to finish at $.7225 for the day. While we’ve discussed ethanol production levels dropping to 5-month lows contributing to this rally previously, the rally in feedstock prices shouldn’t go unmentioned. Corn (the food we make into ethanol) and soybean (the food we make into biodiesel) futures have rallied 15% and 8%, respectively, over the past month.

A “power blip” at Citgo’s Lemont refinery sent gasoline prices in Chicagoland higher by 23 cents yesterday. The region is susceptible to price spikes (we’ve already seen a couple this year about twice as large) since it's mainly supplied by a small handful of refineries. Two of those refineries are currently either partially or completely shut down for turnaround/overhaul. Fun fact: the staff at the refinery performing its turnaround are on strike.