Refinery Outages And Global Conflict Keep Energy Markets On Alert

Energy markets are seeing modest gains in early Thursday trading, after another back and forth session overnight.

U.S. Brokered negotiations between Ukraine and Russia have ended with an agreement on a prisoner swap, and not much else according to preliminary reports.

Ukraine targeted Russia’s largest refinery in an 8 hour attack with drones being launched from more than 1,800 miles away. While fires have been reported from the attacks, it’s not yet clear what if any of the plants operating units were hit. Assuming there is some damage to the plant, this would mean Ukraine has hit Russia’s top 4 refineries in the first 12 days of November, along with a couple others, which combine to make up more than 1/3 of the country’s total capacity. Russia has already been forced to resume rationing fuel sales and extending its export restrictions even before the latest attacks on its largest facilities this week.

Meanwhile, Russian diesel that was originally destined for the U.S. as part of the Presidents’ futile plan to lower prices have been forced to divert to Brazil after U.S. buyers appear to be avoiding the potential legal ramifications, not to mention the optics, of importing Russian fuel.

The UKMTO reported another vessel was attacked Wednesday, off the UAE coast. Iran is claiming new attacks on 2 VLCC tankers, the largest in the world, that hold 2 million barrels of oil a piece, but those claims have not been verified.

The Saudi/Houthi war is raging on with fresh attacks on both sides of the conflict in the past 24 hours, although no new energy targets were noted.

A Quantum Commodity note Wednesday said satellites had detected a fire at Exxon’s 275mb/day Joliet IL refinery Wednesday afternoon, but that news hasn’t yet been confirmed by any other sources, there’s no filing with the IEMA, and cash markets in the region haven’t reacted to suggest that the facility was having yet another upset after 2 others that contributed to strong basis rallies earlier in the fall.

Marathon issued a statement to Bay area residents that the 2 flaring reports at its 48mb/day RD refinery in Martinez CA were part of planned maintenance, and not a cause for concern.

Last night, P66 reported level zero flaring at its 50mb/day Rodeo CA refinery, which was also converted from a traditional refinery in the past few years. That event is ongoing, but unlikely to be cause for concern given its low level.

PBF reported unplanned “emergency flaring” at its 160mb/day Torrance (LA area) refinery overnight with no reasons cited in the filing. That upset appears to be ongoing according to the AQMD flare monitoring page.

Gasoline basis differentials in SF and the PNW rallied by more than 10 cents/gallon Wednesday, although none of the refinery upsets noted above would directly contribute to that move.

The DOE’s weekly status report is due out at noon today.