Refined Products Moving Modestly Lower

Refined products are moving modestly lower, while oil prices are moving modestly higher to start Friday’s trade, a fitting divergence to end a very choppy week of trading.

It looks like currency and commodity markets wanted to take a break from their recent mirror image relationship Thursday with both the US Dollar and Energy prices facing heavy selling. The drop in the dollar was blamed on lower-than-forecast inflation reading, the BOE and ECB leaving rates unchanged, and concerns over trade talks with Canada and China.

The sell-off in energy futures – given the lack of any major global fundamental news, rising US stocks, and the aforementioned dollar decline – seems to be driven by liquidation once it appeared that Florence wouldn’t interrupt the NY Harbor delivery hub, and the storm moving towards Texas wouldn’t substantially impact the Gulf Coast refining hub.

Hurricane Florence has made landfall on the North Carolina coast. So far the pipelines connecting the Gulf Coast Refining center to East Coast consumers have not reported any operational issues. As long as the pipelines can continue operating, fuel shortages will be limited by truck capacity rather than inventories. The EIA published a report on the potential impacts to both electricity and fuel supplies Thursday.

While 95L is reaching the Texas coast and has only a 20% chance of developing beyond thunderstorms, the latest forecasts for Isaac show there’s still a chance this system could make it into the Gulf of Mexico next week.

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