Holiday Session Starts Mixed As ULSD Leads, Markets Quiet

It’s a mixed start for the holiday-trading session with February ULSD futures up 2.5 cents, while gasoline and crude oil futures tick modestly lower. Futures will trade in an abbreviated session during the MLK Jr. day holiday but will not post a settlement. Spot markets are not being assessed so most of the industry is taking the day off. Unless something more dramatic happens with futures this morning, most rack prices will carry through until Tuesday without changing.

The relative strength in ULSD is focused at the front of the curve, with time spreads rallying to their strongest levels in a month, while still a far cry from the levels we saw during November’s short-lived spike. Basis differentials remain in negative territory in all major spot markets, suggesting any physical tightness is confined to the East Coast where the NYMEX contract physical delivery takes place.

PBF had 2 unplanned flaring events over the weekend at its 160mb/day Torrance CA refinery. That facility has had a handful of unplanned flaring events in the past week as they work through planned maintenance on other units.

In Northern California, Marathon’s 48mb/day Martinez RD refinery continues to report 1 Level 1 flaring event per day as they work through planned maintenance at the facility. Chevron’s 240mb/day Richmond refinery reported 2 Level 0 flaring events over the weekend, which must not be a big deal since they didn’t make the facility’s Facebook page.

Despite reports that the state of California is offering hundreds of millions in incentives to keep Valero’s 145mb/day Benicia CA refinery operating, the company said it will begin laying off most of its workforce as it begins to wind down operations next month.

Baker Hughes reported an increase of 1 oil rig active (to 410 total) in the US last week while the natural gas rig count dropped by 2 for a total of 122 active rigs. The Primary Vision count of Fracking crews increased by 4 on the week to a total of 160.