Fuel Prices Sink On Shutdown Fears And Hurricane Imelda Tracks Off U.S. Coast

Energy futures are seeing heavy selling for a 2nd day as Monday’s meltdown appears to have prompted more sellers to pile on with ULSD prices down 11 cents already on the week, while RBOB is down nearly 8 cents for far. Product prices were holding around 2 cent losses for much of the overnight session, but tacked on another 2 cents of losses around 7am central, which coincided with live announcements from congressional leaders expressing pessimism that a government shutdown could be avoided. How exactly a shutdown could impact consumers is challenging to estimate, but it’s pretty simple to say a shutdown won’t help fuel demand.

On the supply side of the equation news that Kurdish oil exports of around 200mb/day had resumed flowing from Iraq to Turkey’s export facilities in the Mediterranean after being shut in for nearly 2.5 years. OPEC & Friends are expected to add another 183mb/day to their output target, although it seems clear from recent activity that only about half of that volume will reach the market as most cartel members are already unable to meet their targeted levels. Last, there are reports that Russian diesel exports are continuing near their normal pace, putting last week’s concerns about drone-induced export curbs on the back burner for now.

Today is expiration day for October RBOB and ULSD contracts, so make sure you’re looking at the November (RBX and HOX) contracts for price direction to avoid the low-liquidity noise that often happens as the contracts near their end. There is nearly 6 cents of backwardation between the October and November RBOB contracts, but regional basis values will shift higher to compensate for that drop in the Group 3 and NYH markets that haven’t already rolled.

Refinery maintenance season is near its peak for the fall with plants from Louisiana to Washington shutting units this week for their routine maintenance. In addition to the routine downtime, P66 notified California regulators Monday that it expected to have flaring for the entire month of October at their 139mb/day Wilmington refinery as they permanently wind down those units. PBF reported a low level upset at its 157mb/day Martinez CA (Bay Area) facility Sunday as the company continues its efforts to fully restart the plant following a devastating fire in February.

Hurricane Imelda is churning off of the SE Coast this morning as a Category 1 storm. Fortunately Hurricane Humberto is pulling Imelda away from the coastline which will spare the US most of the potential damage from this system that’s already killed 2 people in Cuba. High seas are expected through Wednesday night which may slow vessel traffic as far north as New England, and some flooding rains are still possible across the Carolinas and Virginia, but otherwise this storm will be following the 2025 pattern of near misses for the US.

More signs of a tough market: Exxon announced it was eliminating another 2,000 jobs as it goes through yet another cost cutting campaign, and Murphy USA announced it was eliminating 100 positions, primarily at its headquarters in the booming metropolis of El Dorado AR.