The Slide Continues This Morning With Fuel Futures Down Another 2% And Oil Down 3%

Energy futures settled down around 4% across the board yesterday. RBOB and HO prompt month contracts lost just shy of 11 and 9 cents, respectively, and WTI and Brent dropped $3.21 and $3.38 on the day. The slide continues this morning with fuel futures down another 2% and oil down 3%, following a report showing a decline in the Chinese manufacturing purchasing managers index. The uncertain economic situation has resulted in reduced expectations for oil demand and downward pressure on oil prices. Attention is now turned to the upcoming June 4 OPEC+ meeting to determine whether further production cuts will be implemented.

Southern Rock Energy Partners is proposing the construction of a large-scale oil refinery in Cushing, Oklahoma, the oil hub which sets the WTI benchmark. If successful, it would be the first refinery built in the US in 50 years and could potentially lower gasoline and diesel prices. The refinery, with a projected capacity of 250,000 barrels per day, would exclusively process US-produced oil. However, analysts remain doubtful about the project's viability due to the complexities involved in obtaining permits, securing financing, and navigating the volatile nature of the industry.

Equitrans Midstream, the energy company with the largest stake in the 303-mile MVP Pipeline, saw a boost in its stock price yesterday following the inclusion of favorable provisions in the tentatively supported debt ceiling agreement in the House of Representatives. The agreement's provisions, which limit judicial review and accelerate federal permits, increase the likelihood of approval for the MVP Pipeline. However, the debt ceiling deal still requires congressional approval, and potential legal challenges outside the agreement's parameters may arise. Despite optimism, the pipeline's approval is not guaranteed.

Following a partial restart in April, the Cenovus Toledo Refinery in Ohio, formerly owned by BP, is set to restart its larger 115,000 b/d crude unit this week after being shut down since an explosion took the lives of two workers back in September last year. The company expects to resume planned run rates after the restart.

Click here to download a PDF of today's TACenergy Market Talk.