Latest Attempt At Diplomacy Unlikely To Make Major Impact On Petroleum Markets

Another day another mixed start for energy markets with crude oil prices trying to lead the complex lower while RBOB futures slip a penny and ULSD futures cling to small gains. Monday’s session was another choppy affair that ended with modest gains as it appeared the European coalition was making some progress during their trip to the White House even though the outcome of those meetings has very few details so far.

A Reuters note this morning highlights why regardless of the outcome of this latest attempt at diplomacy, global petroleum markets aren’t likely to see a major impact, which is a stark contrast to the chaos of 3.5 years ago when the war began. See chart below for reference on the daily trading range of RBOB and ULSD during various market moving events of the past 2 decades.

While the bureaucrats think of peace, the war rages on and energy infrastructure remains a key target on both sides. Russian missiles battering a Ukrainian fuel hub Monday, and Ukrainian drones hitting Lukoil’s 300mb/day Volgograd refinery for the 3rd time in the past week overnight.

Line ‘em up: We’ve reached that time of the year where potential hurricanes move off the coast of West Africa as tropical waves every few days. This morning the NHC is tracking 3 storm systems including Hurricane Erin that all started as one of those waves. The 2nd in line is now given 60% odds of developing compared to 50% odds a day ago, while the 3rd in line is only given 30% odds of becoming a named storm. It’s still too soon to say what path either of the next two systems may take if they do develop while crossing the Atlantic

While Erin is not going to hit the U.S., its impacts are still being felt along the East Coast this week with beach closures and flood warnings from North Carolina to Cape Cod. So far there haven’t been notable issues with the waterborne fuel terminals from New York to New England, but it’s likely we’ll see vessel delays the balance of the week due to high seas while the storm moves north.

Valero reported an upset at its 430mb/day Port Arthur TX refinery that lasted 15 hours Monday. A leaking valve was blamed for the upset in a hydrocracking unit. That filing with the TCEQ came after reports from Energy News Today earlier Monday that the refinery had restarted a cat-cracker unit that had been offline since an unplanned outage on August 8th.

Today’s interesting read: With U.S. retailers set to report earnings this week, a dip in cardboard box orders is flashing warning signs for the health of consumers.