NYMEX RBOB Advances as US Gulf Coast Preps for Hurricane
WASHINGTON (DTN) -- Nearest delivery month West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange softened Monday while the RBOB October contract advanced 1.5% as Hurricane Sally nears the southeast Louisiana and Mississippi coastline, prompting at least one refinery to close ahead of landfall on Tuesday.
A slow-moving Tropical Storm Sally picked up speed and intensified into a category 1 hurricane Monday afternoon with DTN WeatherOps projecting a 60% chance Sally strengthens to category 2 hurricane. Heavy rainfall and dangerous flooding are forecast by DTN.
Phillips 66 is reported to have closed its 255,600 barrels per day (bpd) Alliance refinery in Louisiana, as the hurricane's path is expected to pass west of the plant, while Chevron USA Inc. declined to comment on the status of its 356,400 bpd Pascagoula refinery in Mississippi.
Precautionary refinery outages would add to facilities forced closed by Hurricane Laura in Lake Charles, La., with the PADD 3 Gulf Coast refinery run rate slumping to a 3-year low at 63.9% in early September, according to the Energy Information Administration.
Despite the hurricane, which prompted offshore drilling wells in the Gulf of Mexico in the storm's path to shut-in production, crude futures eased amid ongoing concerns over demand destruction caused by global COVID-19 pandemic. Organization of the Petroleum Exporting Countries this morning revised their global oil demand projection for both this year and 2021 down by 400,000 bpd, with 2020 world oil consumption seen down 9.5 million bpd to 90.2 million bpd.
Crude oil was also under pressure from news OPEC+ would provide producers who have produced above quota, namely Iraq and Nigeria, until November to meet their quotas, with the news coming ahead of the Tuesday-Wednesday Joint Ministerial Monitoring Committee meeting to review compliance.
The JMMC meeting follows news that Libya is set to ramp up crude oil exports starting as soon as this week after Libya's opposition forces led by General Khalifa Haftar on Sunday pledged to end an 8-month long blockade of the country's oil facilities, potentially releasing up to 1.2 million bpd of additional crude oil into the markets. OPEC reported Libyan crude production at 106,000 bpd in August.
October West Texas Intermediate futures ended down $0.07 at $37.26 barrel (bbl), and ICE November Brent futures fell $0.22 to $39.61 bbl. NYMEX ULSD October futures 0.38 cents higher to $1.0934 gallon and the front-month RBOB contract gained 1.19 cents to $1.1095 gallon.
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