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The Energy Report

The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn&pricegroup.com


The Energy Report 09/07/17

Almost all global markets seem to be transfixed on Hurricane Irma that could wallop Florida with an unprecedented and merciless blow and have an impact on many lives as well as the U.S. and global economy. Fox News reported that France's interior minister on Thursday said the category 5 storm killed at least eight and injured 23 on St. Martin. Irma blacked out much of Puerto Rico and is headed toward Haiti and the Dominican Republic.

The storm will go over the Caribbean refining corridor perhaps disabling Caribbean refiners just as U.S. refiners are starting to get back up in the aftermath of Hurricane Harvey. There are worries that massive storage terminals could be destroyed by the storm. Tropical storm Katia has the potential to impact Mexican oil production and could add to Mexican oil shortages that are getting worse. Mexican state-run oil company Pemex said on Wednesday that its facilities were not in danger so far, but it was monitoring Katia's path to decide if further action is needed.There is about 3.8 million barrels of daily refining capacity, or about 20 percent, was shut in, although a number of the refineries, as well as petroleum handling ports, were in the process of restarting as reported by Reuters.

Shortages of product in Mexico and other parts of Latin America are only going to get worse as oil terminals have been shut and many places can't get product because of Hurricane Harvey. Reuters reported that Hurricane Irma has shut down oil terminals across the northern Caribbean, worsening a fuel supply crunch in Latin American countries that have struggled to meet demand since Hurricane Harvey disrupted shipments from the U.S. Gulf Coast last month. Latin America had already been scrambling for almost two weeks to find cargoes because of Harvey, which caused massive flooding in Texas and Louisiana, shutting down oil ports, refineries and production platforms. Irma, which is being followed by two other hurricanes in the Atlantic, is threatening Caribbean refineries, terminals and storage facilities.

There is over 100 million barrels of storage capacity in the Caribbean, which is crucial for those nations because of limited ability to refine crude, and also supply for South American nations including Brazil, Venezuela and Colombia. Several oil trading firms had moved a portion of their U.S. fuel inventories to the Caribbean ahead of Harvey so they could keep selling cargoes to Latin America, traders from two companies told Reuters. Those barrels are now locked in terminals in St. Eustatius, Puerto Rico and the U.S. Virgin Islands, as Irma, a Category 5 storm with winds of 185 mph (295 kph), is expected to hammer the region for several more days before turning north.

U.S. based Buckeye Partners, the largest owner of oil storage facilities in the Caribbean, with 41.1 million barrels of capacity, said on Wednesday it shut its Yabucoa terminal in Puerto Rico. It is monitoring Irma's path to decide if it also has to close its largest terminal in the Bahamas. NuStar Energy on Tuesday closed its 13 million-barrel Statia terminal in the small island of St. Eustatius. Firms leasing tanks in closed terminals in St. Eustatius, St. Croix and Puerto Rico include traders Vitol, Glencore, Novum Energy and Freepoint Commodities, and Venezuela's state-run PDVSA, China's Sinopec and Russia's Rosneft, according to the sources and Reuters vessel data.

Restarting refiners helped gas prices sell off but as Floridians look to escape Hurricane Irma's wrath, there was strong demand and gas lines and shortages, prices did not collapse as the trade awaits what damage could be in store. Still with the projected path of the storm moving a bit more east we are seeing the market adjust a bit. Orange juice futures eased off a bit as the eastward track may not entirely wipe out Florida's orange and grapefruit crop.

The API showed crude +2.79mm, the biggest build in 5 months. Cushing +669k, gasoline -2.544mm, the biggest draw in 6 weeks. Distillates -610k.

Gasoline prices have jumped in the past week. Nationwide, the average gasoline price was $2.65 a gallon. Tuesday, 30.2 cents higher than a month ago, according to AAA.

Reuters reports oil output at Libya's Sharara field, the country's largest, was resuming on Wednesday after a valve was reopened on a pipeline shut by an armed group for more than two weeks, Libyan oil industry sources said.

Make sure you stay tuned to the Fox Business Network for the latest developments. I'm headed to Dallas this October along with more than 50 of the world's leading financial experts. We'll be discussing the state of the economy, how politics are impacting the markets, and much, much more. And I'd love for you to join us. Reserve your free spot! Call me at 888-264 or email me at pflynn@pricegroup.com.

There is a substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

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Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Contact Phil at 800-935-6487 or pflynn&pricegroup.com.