Refined Products Breaking Even After Yesterday's Rally Recovers Last Week's Losses

Refined products are holding near break even levels to start Tuesday’s trading, after a strong Monday rally wiped out nearly all of the prior week’s losses. Oil prices also advanced Monday, but did not keep pace with the nickel gains in products, which suggests there was more to the move than just the concerns of violence in Syria spreading across the region, and brought some small relief for refiners struggling with margins that are close to 3 year lows.

Energy News Today is reporting a fire at BP’s Rotterdam refinery, the Netherland’s largest facility at 400,000 barrels/day, which is likely to put a bid under the European ARA hub pricing given its proximity and size, which could ultimately lead to more demand for US products to head across the pond. US diesel exports to Europe already reached a record high earlier this year, and were expected to continue at a brisk pace due to a cold winter and shutdowns of European facilities. 2 weeks ago Gunvor announced it was temporarily closing its 75,000 bpd Rotterdam refinery due to weak economics, and Neste was forced to close its Rotterdam RD facility due to a fire a month ago.

There was an explosion and fire at the loading rack of ENI’s refinery and fuel depot near Florence Italy that killed 2 people and critically injured several more. It appears that operations at the refinery weren’t directly impacted by the event, but it offers a harsh reminder of the dangers inherent in the business.

Yesterday the EIA took a look at the struggles for California’s fuel supply network, and discussed how new law changes and the announced closure of the P66 Los Angeles refinery might impact supply. Last week, California’s regulators decided to delay its decision on how to implement a new plan to cap refiner’s profits in the state.

Yesterday Marathon is planning on 2 weeks of planned flaring at its Carson CA refinery, part of the complex that makes up the largest facility in the state. That maintenance is scheduled to end Christmas day.

Chevron reported flaring at its Pasadena TX refinery Monday as it resumes operations on a reformer unit that had undergone extended maintenance.

The Dallas FED issued a report on the boom in backup electricity generation across Texas, with the state’s excess of natural gas giving its micro-grids a distinct advantage. Not surprisingly, the Permian basin has become ground zero for this activity given its rapid increase in electricity demand as rigs move away from burning diesel, and due to the glut of natural gas supply.