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Markets Calm Before the Next Storm

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Daily Settlement Prices

A long and stressful energy week ended with a bout of tranquility, as gasoline prices slipped off recent record highs but retained the wary eye of both the futures and physical market community. Though no new news was reported today by oil companies, refiners or the Colonial Pipeline (No news is really just no news), the market seemed to be in need of a break after such a volatile, one-sided week.

Prices were down throughout the day, though a late day rally did recoup a good bit of the earlier losses. The newly prompt October RBOB and Heating Oil contracts ended the week up 20-cents and 12-cents, respectively. Gulf Coast cash markets, for both gasoline and diesel, were even more robust, with almost double the weekly NYMEX gains.

Colonial Pipeline will attempt to restart its line flow Sunday evening by putting new product into the line in an effort to move things along. The newly published delivery schedule showed slightly more delays of product into most Southeastern markets.

Hurricane Irma continues to gain strength in the eastern Atlantic Ocean. With one more day of information, the recent tracking models suggest the storm will pass near the U.S.Virgin Islands and Puerto Rico before taking a fairly sharp turn right. Such a path might bring it somewhat close to the east coast of Florida and beyond. Still lots of time for hyperbole and conjecture on this path, and next week's model will have a much more definite view of Irma. 

Cash markets, especially gasoline, continue to rise in the Gulf Coast (and, by proxy, in the Southeast). As most rack prices are set based on known replacement cost, the recent storm has caused havoc in determining true replacement cost (and replacement timing). Cash markets have moved up even more aggressively (hurriedly? forcefully?) than the NYMEX, with product potentially hard to come by in the Gulf Coast and then, potentially, in these Southeast markets.


090117 4 Week Price Movement


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