WTI Settled Higher For An 8th Consecutive Session Before Pulling Back Slightly This Morning

Energy markets survived a heavy wave of selling Wednesday morning with RBOB and WTI futures turning early losses into afternoon gains, while ULSD futures bounced more than 6 cents/gallon off of their morning lows.

WTI settled higher for an 8th consecutive session before pulling back slightly this morning.  That relative strength in crude oil and pullback in products has put downward pressure on refining margins, although the forward curve charts below suggest a rosy outlook in the years ahead for those that weathered the COVID and ESG storms over the past few years as the global refinery network remains limited in its capacity.  

The API reported draws in gasoline and crude oil inventories of more than 5-million barrels each last week, while distillates saw a small increase of around 300,000 barrels. The EIA’s weekly report is due out at 10am central this AM. There will be some noise in oil production due to precautionary shutdowns due to Idalia’s movement through the Gulf of Mexico last week, but otherwise that storm seems to have had little impact on energy supplies.  

Hurricane Lee is rapidly intensifying and is expected to reach category 4 status tomorrow.   Most models continue to show Lee staying offshore as it moves north along the East Coast, but a few projections show that a landfall is still possible anywhere from the outer banks of North Carolina to New England.  Even if the storm doesn’t hit land, it is still likely to roil shipping traffic, particularly in and around New York harbor, just as the industry is racing to complete the fall RVP transition.  

A Reuters report Wednesday suggests the White House will delay a ruling on how to handle SAF made from ethanol until December, as the administration wrestles with the troubling fact that the intended carbon reduction of fuel made by clearing more land to plant corn simply doesn’t exist. RIN prices continue to move lower this week, touching fresh 18-month lows Wednesday as the rapid influx of Renewable Diesel production adds more physical and RIN supply to the market.  

Exxon’s Beaumont refinery reported a process upset Wednesday at an FCC unit.  The issue lasted approximately 8 hours but impacts on production remain unclear. Delek’s Big Spring refinery reported another issue, this one due to storms, after disruptions at that plant were part of the reason the EPA granted an RVP waiver to El Paso to try and avoid widespread gasoline shortages of their boutique 7lb RVP blend.

Mexico’s new Dos Bocas refinery has reportedly begun producing some refined products, nearly a year after its grand opening. The Mexican president insists that the facility will produce nearly 300,000 barrels/day of fuels by year end, even though several earlier claim of similar output levels proved false. In an unrelated story, 11,000 runners were disqualified from the Mexico City marathon for cheating. 

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