Oil funnymentals, page-8

Bearish engulfing candle on brent.. logical place for a pivot.. not too severe, only 1.4% down.. contrast to WTI down over 3%.. appears like a dislocation between te benchmarks is well and truly in place..

Friday, September 8, 2017

Oil prices collapsed again on Friday as China aims to reduce the capacity of its teapot refineries and Hurricane Irma zeros in on Florida. This dramatic drop in oil prices has ended several days of strong gains and created the largest spread between WTI and Brent in two years.

Harvey recovery continues. More refineries are trickling online. Crude is getting loaded on tankers in the ports of Corpus Christi for export. According to IHS Markit, Galveston Bay is operational, and the Houston shipping channel is mostly open. Three refineries in Lake Charles are finally receiving crude oil. Railroads are mostly back up and running. IHS Markit says that 8 of the 20 refineries impacted by Harvey are running at “normal” rates, while all but one of the other 12 are moving towards, or are in the process of, restarting.

EIA: massive fall in crude oil production, refining runs. There is nothing surprising about the EIA data release, but it is still eye-opening to see the hard numbers. On Thursday, the first government data since Harvey hit showed a plunge in U.S. crude oil production by about 750,000 bpd for the week ending on September 1. IHS Markit says the Eagle Ford is quickly restoring lost production and the offshore sector is also getting back to normal. Refining runs were obviously down sharply, while imports also fell. Gasoline prices jumped to a national average of $2.679 per gallon, up from just $2.399 a week earlier.

Gasoline prices fall, crude rises as Gulf Coast recovers. The quick restart to so many Gulf Coast refineries has led to a quick fallback of gasoline futures. WTI swiftly rebounded as well, with fears of major disruptions subsiding as the Texas’ energy industry gets back on its feet.

Brent-WTI spread largest in two years. The spread between Brent and WTI jumped to its largest disparity in two years at over $6 per barrel. But that will likely ease as Gulf Coast refineries ramp up and U.S. crude is exported. There is a line of tankers sitting in the Gulf waiting to receive crude, so U.S. oil exports should rebound quickly.

Irma bears down on Florida. The Category 4 hurricane threatens historic destruction up and down Florida. Next week it will move up through Georgia and possibly South Carolina. The hurricane will almost certainly spare the Gulf of Mexico, allowing the energy industry to dodge this one, although BP (NYSE: BP) did evacuate an oil platform as a precaution. Florida is reporting gasoline shortages at more than 1,500 retail locations as millions of people stock up and head north. “I do believe that the peninsula is going to be direly short of gasoline for the evacuations,“ Tom Kloza, global head of energy analysis at the Oil Price Information Service, told the WSJ. But, unlike Harvey, there won’t be huge energy industry assets in the line of fire. The main energy infrastructure concerns will simply be on crude oil and product storage facilities. The Bahamas are home to a sizable storage facility holding 26 million barrels. Florida’s nuclear reactors at Turkey Point and St. Lucie are shutting down in anticipation of the storm. Right now the impacts on demand are unknown, but natural gas demand in Florida is expected to take a sizable, if temporary, hit.

PIOTRVIP