Markets Celebrate China's COVID Case-Count Collapse

Energy futures have taken back half of the losses they suffered during their 7 day selloff. Equity and commodity markets all seemed to be celebrating China’s COVID case count collapse Monday, and the US dollar was moving lower ahead of the FED’s virtual summit that may or may not signal the end to the latest round of money printing.

Adding to the bullish fervor Monday were a slew of refinery and oil production mishaps, all unrelated to the Hurricane that took much of the focus over the previous few days. 

Two of the largest refineries in the country, both on the TX Gulf Coast, had units knocked offline over the past few days, with power loss at least partially to blame for the unexpected shutdowns. Speaking of power loss, LA Spot markets saw big spikes in both gasoline and diesel basis values Monday after a local refinery was reportedly forced to shut again due to lack of power.  

At least 5 people have died and 2 are still missing after a fire on an offshore oil platform in the Bay of Campeche. Efforts to stop that fire, which include shutting off natural gas supplies to surrounding wells, have cut oil output by nearly 450,000 barrels/day, and could be a contributor to the big rally in oil prices this week. Initial reports suggest the fire was caused by a lightning strike, just a day after Hurricane Grace passed through the area last week.

It looks like the NHC knew what it was talking about when it predicted an above average year for storm activity. As Henri moves back offshore, 3 more potential storms are being tracked this morning, and the 2 given low odds of development yesterday are now given a 60% chance of being named this week. None of the 3 potential storms looks particularly ominous for refining country, but as we just saw with Henri, the early model runs can be way off, so we’ll need to keep watching their progress. The system furthest to the east looks like it will develop in the Caribbean in a similar spot where we saw 2 storms that ended up hitting Louisiana last year. 

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