Energy Markets Searching For Bottom Reaching Multi-Month Lows

Energy markets are searching for a bottom after reaching fresh multi-month lows Wednesday. There was hope for a reversal Thursday rally overnight, but most of those gains have fizzled in the past hour. A tariff compromise was reached for some automakers Wednesday, but there appears to be no progress on anything related to energy supplies, so the scrambling to find replacement barrels near both borders continues.

WTI reached a low of $65.22 Wednesday, a nickel below the low set last September, marking the lowest trade since May of 2023. The afternoon rally kept prices away from the immediate threat of a technical breakdown that could test the $60 range, and likely pull refined products down another 12-15 cents.

RBOB and ULSD futures bounced more than 4 cents off their mid-day lows, but still finished with their lowest settlement values of the year, and remain in precarious position on the charts.

The weekly DOE report showed a large drop in refinery runs in PADDs 1, 2 and 3 while 4 & 5 saw increases. The biggest percentage drop came on the East Coast where P66 is going through seasonal maintenance on the region’s largest facility which contributed to run rates dropping by nearly 33% on the week. On the flip side, it’s particularly noteworthy that the West Coast is seeing run rates well above their 5 year average despite multiple refineries being shut down permanently during that stretch, and the PBF Martinez refinery still offline following a February fire.

PBF provided an update on its fire-damaged Martinez refinery this morning after finally being able to inspect the site more than a month after the blaze occurred. Repairs will be made, and will be completed in 2 phases, the first of which is expected to wrap up early in Q2, which will allow the facility to operate at roughly 50% capacity, while the second phase won’t be completed until sometime in Q4. While the refinery may be partially operational as soon as April, the release suggests that its production of finished products will be limited and neither EPA or CARB diesel looks like it’s on the list of products that will be made during repairs.

Meanwhile, TX had 2 refinery upsets reported that coincided with the big storm system that swept the state Tuesday, but no major disruptions to production have been reported thus far.

Marathon reported they discovered a leak in a hydrotreating unit at their Galveston Bay refinery Tuesday afternoon, which required the unit to be placed in standby.

Flint Hills reported a power “blink” at their Corpus Christi West refinery that caused flaring at the facility Tuesday afternoon. That upset comes less than 2 weeks after the company had a power issue at their Corpus Christi East facility. Both the Marathon and FHR upsets this week

Los Angeles Spot differentials were selling off Wednesday with both CARBOB and CARB diesel basis dropping, adding to the heavy losses in futures. We may see an about face in those differentials today however after Chevron reported 2 unplanned flaring events at its El Segundo refinery the first coming Wednesday afternoon and the 2nd happening overnight.