Inventories are a secondary consideration: Estimates for Wednesday's crude inventory report range from a decline of 2 million to an increase of 2.6 million barrels of crude. Most analysts see a decline in gasoline stocks of at least 2 million barrels. What Iran does will no doubt take precedence this week.
Gasoline put on the real show, rising $0.07 to $2.067 for April delivery. That makes a $0.525, (34%) rally in the nine weeks since Chevron Corp. (CVX) announced it had a fire at its Richmond, CA site on January 15th!
Since mid January the maintenance season has turned into a Ray Bradbury novel with fire after fire being reported. From Imperial Oil forcing the Torontonians to ride bicycles, to blazes at Valero Energy Corp. (VLO), and on and on.
BP plc (BP) reported another fire, this time at its 175,000 bpd Whiting, Indiana refinery last Thursday (two years to the day after its infamous Texas City fire) and said yesterday that the facility would be offline 4-6 weeks.
Holly Corp. (HOC) also announced a fire yesterday at its 26,000 bpd Salt Lake City, UT facility. Output was listed as reduced, but if it goes offline this represents nearly a quarter of the company's capacity. Holly has one other facility, an 82,000 bpd refinery in New Mexico.
Most (but not all) of these snafu can be seen here along with when the facility returns or is scheduled to return to service.
It Just Doesn't Get Any Better Than This Watch: Deutsche Bank and BS downgraded a couple of prominent refiners before the open yesterday, based on valuation and/or topping margins in the east. I doubled my hobbled TSO put position yesterday, as it's been rallying on what will almost certainly turn out to be an anomalously high and relatively short-lived crack spread period. Thanks for the help fellas. Good company, nothing personal. Just too far too fast with a lot of hot money on the trail.
Natural Gas: Along for the ride. It's time to think about making the switch from thinking about heating degree days, HDDs, to cooling degree days, CDDs. You'd think it was still a little early to worry about cooling load, but then you look at the forecast and it's already warming up. Ok, maybe it's just hot around here. CDD's are still only expected to total 6 this week and next for the whole country.
Turning back to heating degree days, last week was about the same as the prior week at 110 (which the Climate Prediction Center pretty much nailed at the beginning of last week). We should see another small injection into storage this week.
The early read on this week's weather is for HDDs to drop to 67 (typical slack demand should season weather). Expect an even bigger build.
Weather Watch: 90 Day Map. Welcome La Nina. Gas may fall to $6 once Mahmoud backs down and oil cools a bit, but a hot summer forecast will put a floor under a commodity-like gas that fuels 20% of electricity generation.
