Petroleum and refined product futures were lower at midday Monday, despite Hurricane Beryl's early morning landfall along the Texas coast as a Category 1 storm.

There are multiple factors behind Beryl's limited impact on markets, and the refining backdrop is much more distressed than it was on similar dates in 2023.

U.S. Gulf Coast gasoline, for example, fetched a price around $24/bbl above sweet crude on this day in 2023. This morning finds motor fuel blendstock values off by 5-6cts/gal from last Wednesday, and it lowers the gasoline crack to just $13.34/bbl. Much of July and August in 2023 saw a rally for seasonal motor fuel but no such performance has ensued this year.

Gulf Coast gasoline fetches a very wide 23cts/gal discount to CME futures. That relationship resulted in a publication time value of about $2.315/gal at the Gulf Coast. August RBOB futures were off 1.44cts/gal at $2.5447/gal, even with sporadic reports of refinery issues in Corpus Christi and Port Arthur, Texas.

The Monday performance is mute testimony to the notion that all hurricanes destroy demand, but it is the rare storm that destroys supply. As of midday Monday, Beryl resulted in inconvenience as opposed to major processing losses.

On the diesel side, there are similar concerns. Diesel cracks are more lucrative but possible downtime did not flush any new buyers into the market. August ULSD contracts on the Nymex faltered by 2.06cts/gal to $2.5818/gal by midday. Every cash market east of the Rockies saw discounts for physical diesel with some modest premiums to futures in California.

Crude took a back seat to refined products for much of the morning. Benchmark numbers were 75cts/bbl to $1/bbl below where they settled last Wednesday ahead of the long July Fourth weekend.

August West Texas Intermediate fell by 83cts to $82.33/bbl while September Brent eased 72cts to $85.82/bbl.

The perception in crude oil markets holds that demand for crude is likely to exceed supply through the rest of July and all of August. But September balances herald a slight oversupply later in the quarter that could worsen substantially if OPEC+ tweaks output higher later in 2024.


This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.


--Reporting by Tom Kloza, tkloza@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com


(END) Dow Jones Newswires

07-08-24 1247ET