Monday May 23, 2016
Markets seesawed on either side of unchanged for most of the day of Friday, as markets took a relative pause, following the week's upward move. June Heating Oil (HO) was the big mover of the week, finishing the period up slightly over 8.5 cents.
Last week, June WTI finished the week up around $1.50, but expired Friday, and now the more expensive July contract is prompt. The U.S. dollar, which had been volatile the previous week, also experienced a relative lull on Friday, as it spent most of the day, moving in a narrow range.
The last two Friday's have been similarly quiet in nature. It will be interesting to see if this upcoming Friday continues the trend, especially as it kicks off a long weekend. Around mid-day on Friday, it was reported that a fire had broken out at Philadelphia Energy Solutions' Philadelphia refiner. As a result, NYMEX HO spreads moved higher and market action was muted, as participants awaited further information on the fire. Reuters reports that the fire was to a Reformer unit that was under maintenance, but the fire would likely cause the maintenance window to be extended. Any prolonged down time is more likely to affect distillate and gasoline markets that reflect a New York Harbor number, rather than its Gulf Coast counterpart.
In Gulf Coast markets, while distillate basis continues to be stuck within a narrow range, gasoline saw some action on Friday. As the day progressed, gasoline basis gained around 1.75 cents, which is the first sizable upward move the contract has seen in several trading days. Partially responsible for the upward move was a strongly bid Midwest market. As a result, Gulf Coast barrels are being pulled to the Midwest, away from the Colonial Pipeline and other PADD I arteries. So while the NYMEX move was only 17 points, the increase in Gulf Coast gasoline basis resulted in higher rack prices in PADD I.
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