Oil’s Modest Rebound Meets Rising Uncertainty In The Middle East

Oil and diesel prices were seeing a modest recovery bounce this morning as the U.S. and Iran have called off today’s scheduled meeting in Switzerland after Israel launched new attacks in Lebanon, threatening the tentative peace agreement signed earlier in the week. For those that haven’t read the 14 point memo yet, the first paragraph mentions Lebanon 3 times, so it’s explicitly a key component to the larger deal.

The U.S. has (once again) tried to assure Iran that Israel won’t further escalate its attacks in Lebanon, has helped erase most of the gains seen earlier in the morning RBOB gasoline prices have been resisting the move higher after a big reversal higher on Thursday. While the cause for Thursday’s 12 cent bounce in RBOB is unclear, it does seem that other “news” sources catching on to the Monroe refinery shutdown that Energy News Today reported Tuesday was part of the cause.

Spot markets are closed today (along with banks) for the Juneteenth holiday, while NYMEX futures will trade in an abbreviated session this morning, but will not post a settlement. Given the uncertainty in the Middle East, don’t be surprised to see more rack price changes over the weekend, even though spot markets won’t change until Monday night.

If you need something to read today OPEC has released its Annual World Oil Outlook (WOO) with in depth projections for the industry through 2050. As per usual, the cartel is very optimistic about demand over the next 25 years.

Exxon reported an upset in multiple units at its 588mb/day Baytown TX refinery that started Thursday morning and lasted 24 hours. The report filed with the TCEQ does not mention if weather was a factor, but cites “unplanned equipment shutdowns” that resulted in the unit upsets, but also noted “minimal” impact to production from the event.

The EIA Thursday highlighted one of the major challenges with producing more oil in the Permian basin, it’s producing too much natural gas. Several analysts have noted over the past few years that oil output in the region is more limited by a lack of adjacent gas takeaway capacity than any other factor, encouraging the race to bring more pipeline and export capacity to the region.