Supply issues are hot topics in today’s discussion. BP’s 413,500 bpd Whiting refinery is only operating at half its capacity and repairs on its 260,000 bpd CDU could take several weeks. Additionally, as mentioned last week, a gas leak in Line 1 on the Colonial Pipeline was discovered last week. A bypass line around that section is currently being constructed with the hopes of resuming full operations of gasoline deliveries from Houston to Greensboro later this week. This line closure has caused significant retail price increases throughout the south, and even product outages. Continue to monitor increases in retail prices moving north as the effects of this shutdown permeate.
Militia groups in Libya have disrupted the first crude export from Ras Lanuf since 2014. The tanker “SeaDelta” halted its loading on Sunday when fighting broke out between facility guards and Kahlifa Haftar militia. SeaDelta sailed away during the conflict, but may return sometime today to finish the loading of 781,000 bbls of oil intended for shipment to Italy. As result, the market has bumped up, rebounding from Friday’s loss.
The Algiers meeting next week is still a topic of discussion as conflicting rumors continue to flood the newsstands. According to OPEC Secretary-General Mohammad Barkindo, discussions in Algiers will be consultations and no major decisions will be made during talks with OPEC and non-OPEC producers. Venezuelan President Nicolas Maduro believes a deal could possibly be announced this month to stabilize oil markets. Iran’s President, Hassan Rouhani was quoted by the news agency SHANA on Sunday saying that Tehran supports any move to stabilize the global oil market.
The outcome of the meeting is surely still unclear, but what is clear is the output and crude supply does not look like it is going to back down. Once the Libyan issue is resolved Libyan production will be back online, the Nigerians are planning to come back online, Russia has opened a new oil field and plan to bring 200,000 bbls into the market by year end, the U.S. has added rigs 11 out of the past 12 weeks, and Iran’s oil production has been rumored to have soared 15% in August.
Crude is currently up $0.95 to $43.98, RBOB is down 21 points to $1.4595 and ULSD is up $0.0255 to $1.4306.