Tuesday, September 5, 2017
Crude oil futures are rising and refined products futures are falling in early trading on Tuesday, as refining capacity on the Gulf Coast continued to recover from Hurricane Harvey and with news that Russia and Saudi Arabia discussed the possibility of extending the output agreement. Weakness in the US dollar against a basket of currencies and lackluster economic data may have been helping to limit gains. Market participants have a quiet day ahead of them on the economic calendar, and will have to look elsewhere for further direction. Weekly inventory data from the American Petroleum Institute and the Energy Information Agency are delayed by a day this week due to the holiday yesterday.
Front-month WTI crude futures were up by 1.4% as of this writing, while front-month gasoline futures were down by over 3%. According to Reuters, refining activity on the Texas coast was ramping back up, with Valero saying yesterday that its Corpus Christi and Texas City facilities were back at pre-hurricane levels. Regulatory filings showed multiple units were restarted at Valero’s Port Arthur refinery. Ramp-up at the Three Rivers refinery continued. ExxonMobil is said to be making progress restarting its Baytown, Texas refinery and Phillips 66 is preparing to restart operations at it Sweeny refinery. As of Monday, the Department of Energy said 2.1mb/d or 11.4 percent of U.S. refining capacity was shut, with eight refineries down. According to the Bureau of Safety and Environmental Enforcement, about 7% of Gulf of Mexico offshore oil production was offline. Ship traffic has begun to normalize, with the Coast Guard allowing some Port Arthur barge traffic, and with 25 other ports in the state operational with vessel draft restrictions on Monday. Pipeline flows are also looking to increase, with Colonial Pipeline reopening its main distillate line from Texas to Louisiana, and Explorer Pipeline was looking to resume flows yesterday.
On Friday, WTI crude settled just 6 cents higher at $47.29 a barrel, while Brent crude shed 11 cents for a $52.75 settlement. Gasoline dropped 3.13 cents lower to $1.7479 per gallon, but heating oil edged up 49 points to close at $1.7468. Natural gas futures rose 3 cents to settle at $3.070 per MMBTU.