The Energy Complex Is Taking A Breather This Morning

The energy complex is taking a breather this morning with the big three US benchmarks posting >1% losses to start today’s trading session. Both gasoline and diesel futures are down around 3.5 cents so far today while the prompt month crude oil contract leads the way lower trading ~$1.50 per barrel under yesterday’s settlement.  

Despite the buying action seen since the bullish weekly inventory report was published on Wednesday, the September WTI contract is poised to end the week lower as concerns surrounding the not-recession remain. A strong US dollar and weak equity performance are also cited as reasons for crude oil futures maintaining the bearish trend it’s been in since prices hit highs over $120 per barrel back in June.

The spread between New York Harbor and Gulf Coast gasoline prices remains at the highest levels in recent memory, even after it’s dropped 26 cents from last month. Refiners are pushing as much product as they can up to the northern Atlantic coast, but the practical avenues of moving product from refining country to the tri-state area are limited. With the premium over shipping costs on the Colonial Pipeline going ballistic, producers are exploiting a well-known loophole to resupply the tri-state area.

The system the National Hurricane Center has been tracking this weak crossed over into the Gulf of Mexico overnight, and is now given a 40% chance of cyclonic organization in the next 48 hours. While it is expected to form into a tropical depression later today or early tomorrow morning, the Center expects it to make landfall somewhere in northeastern Mexico and cease development, sparing the refining heart of the US in Houston.

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