International Tanker Rates Have Increased
International tanker rates reached an elevated $10/bbl yesterday, sending crude benchmarks lower Tuesday. Traders anticipate more crude will stay parked rather than being shipped for transcontinental arbitrages, leading to higher US stockpiles. That combined with an EIA estimate of an increase in shale oil production for November sent WTI 1.5% lower yesterday.
Two San Francisco Bay Area refineries experienced production disruptions yesterday in the wake of a 4.5 magnitude earthquake as measured by the US Geological Survey. Spot market reaction to the news was relatively mild for LA, with California grade diesel up about 2 cents on the news at yesterday’s settlement. The earthquake also caused a couple of ethanol tanks to catch fire at NuStar Energy’s Crockett plant. Fortunately the fire was quick contained and extinguished with no reported injuries.
The system in the Gulf of Mexico has cleared the Yucatan Peninsula and now has a 50% chance of organizing into a tropical storm over the next 5 days. Forecasts on its direction are still vague, placing its destination somewhere along the Texas and/or Louisiana coast. Refiners will be keeping a close eye on its progression and potential impacts.
The energy complex is mixed this morning, with RBOB and Brent crude sinking lower while HO and WTI are showing green. Save any more drama from the Middle East or US-China bickering, traders will be looking to the inventory reports due out today and tomorrow for price direction. It will be interesting to see if the anticipated impact of the premium over crude carrier services will bring down American crude oil exports, which have set seasonal highs every week this year, over the next month.