Monday September 19, 2016
Colonial Pipeline started to ship gasoline on its main distillate line ("Line 2") on Friday, and has also begun working on a line bypass to work around the leak on the gasoline line ("Line 1"). The temporary bypass line is several hundred feet long, and fits into the narrative that Colonial hopes to have "Line 1" restarted at some point later this week.
Product supplies already in either pipeline are moving at reduced rates, as the lack of new product flow at origin is not pushing in transit barrels at the normal rate. Several state governments have already waived RVP requirements (the early switch to winter gas) and the limit on driver hours. Adding to North Carolina, Tennessee, Georgia, the Virginia Governor declared a state of emergency late on Friday.
The NYMEX traded in a volatile fashion again on Friday, though directionally much like the previous few days. RBOB again outperformed its energy counterparts, as worries of gasoline not reaching New York via the Colonial Pipeline left RBOB well bid (including the market structure). WTI slogged lower during the day, and ultimately settled down nearly a dollar at $43.03 (the lowest front month WTI settle since August 10).
For the week, WTI was down nearly three dollars. A stronger dollar has certainly added to the oil weakness, though concerns about reduced crude oil demand from reduced refinery runs is also contributing to the recent price malaise. RBOB was up three cents on Friday (and ten cents for the week).
Colonial Pipeline will continue to publish updates as necessary on the progress of the bypass and the delivery schedule of inline product. Continue to visit here (papco.com/blog) or sign up for an email of these daily summaries, or visit the Colonial Pipeline website directly.
Published by PAPCO, Inc. (PAPCO)
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