Thursday September 15, 2016
Colonial Pipeline announced Wednesday that limited volume of gasoline has begun to pump on "Line 2" (previously distillate-only pipeline). The company also said roughly 6,000 barrels of gasoline had leaked from "Line 1", though extraction and repairs to the pipeline have not yet begun (safety concerns). Pumping rates have slowed and delivery times have been adjusted (backwards) to reflect the issues in combining products into one main pipeline, and the lack of pressure (flow) that physically pushes the barrels north through the pipeline.
NYMEX oil prices moved lower for the second consecutive day on Wednesday, pressured by a moderately bearish Department of Energy (DOE) inventory summary which showed larger than expected builds for gasoline and distillate products. October WTI slid by $1.32 (settled at $43.58) and has now cumulatively slide by nearly three dollars in the two days. Still, even with those declines, WTI is within the recent range (albeit close to the bottom) and may find support at these numbers (as it did two weeks ago). The results of this week's DOE report were as follows:
- Crude Oil - draw of 0.6 MMbbls (versus expected build of 3.8 MMbbls)
- Gasoline - build of 0.6 MMbbls (versus expected build of 0.3 MMbbls)
- Distillate - build of 4.6 MMbbls (versus expected build of 1.5 MMbbls)
This report was the first to summarize data post-Hurricane Hermine. Crude oil and product imports did smartly rebound (expected), though the crude oil advance was far less than anticipated. Refineries continue to run at healthy rates, churning out significant volumes (the "10 and 5" rule: ten million barrels per day of gas production, five million barrels per day of distillate production).
Despite the moderately oil draw, the product builds were significant enough to push the market lower. Heating Oil took the brunt of the fall, losing four cents on the day. RBOB was down a penny or so. Despite these changes, and the trading range of oil, the market's real focus has, and will continue to be, the Colonial Pipeline leak / shutdown and the Southeast supply issues.
Published by PAPCO, Inc. (PAPCO)
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