Coffeyville refinery fire: CVR Energy confirmed that there was a fire at its 132,000 barrel per day (bpd) refinery in Coffeyville, KS. This occurred on Tuesday afternoon and was located in naptha hydrotreater unit of the facility. The fire was extinguished and all employees have been accounted for with the company now conducting an investigation. The market is still in process of figuring out the impact of this event. Basis levels for both gasoline and diesel did climb yesterday in the mid-continent’s Group 3 spot market.
U.S. Weekly Inventory: Yesterday afternoon the American Petroleum Institute (API) released its weekly U.S. inventory update (on week ended January 17th). This showed a build across the board. Crude stocks were up 958,000 barrels when a decline of 1.2 million barrels was the expectation (last week had a nearly 2-million-barrel draw). Gasoline inventory rose by 3.23 million barrels (which was slightly greater than anticipated 2.3 million barrels of increase) and distillate stocks were up by 1.88 million barrels. The U.S. Energy Information Administration (EIA) will be providing its weekly detail later this morning at 10 am CST which is 1 day delayed considering Monday’s holiday.
Russia: The second stint of a Donald Trump presidency has begun with a flurry of activity. One of the keys which energy markets are paying attention to is how the new president deals with the Russia-Ukraine war. Yesterday, he suggested new tariffs on Russia would be added to sanctions if the country does not make a deal to end the war. He also implied they could be applied to “other participating countries” which were not identified. Imports from Russia (into U.S.) have fallen tremendously since war began as first 11 months of 2024 counted those to be $2.9 billion compared to $29.6 billion in 2021. Even though Russian fertilizers used in agriculture still make way into U.S. (about $1.4 billion worth in 2023) there is zero petroleum products coming after was at about $13.5 billion a decade prior.
Market Overview: The Complex is beginning the day with limited positivity after yesterday had both West Texas Intermediate (WTI) crude and RBOB gasoline showing losses for a fourth consecutive settle. RBOB gasoline also did settle below the 14 Day Moving Average (DMA) of $2.0745 so it will be of interest whether can hold gains today.
ULSD distillates (daily) :
Following announcement of U.S. sanctions on Russia in early January, ULSD distillates market saw a pretty solid jump as was up more than $0.28 from settle on January 9th to high tick earlier this week. However, as market continues to interpret actions of Trump Administration, more than half of that increase has come out of it. Plus, expectation of warming temperatures (forecast to be above average over next two weeks in the Midwest) is also taking some support away from the contract. Yesterday’s API report indicated a larger build (+1.88 million barrels) than expectation (+580,000 barrels) and there will also be interest on today’s EIA info to see where that reports. A strong build could put a bit of added pressure on the contract. Support level to downside continues to be $2.4183.
Despite today's Energy Information Administration (EIA) weekly update showing that crude inventories had a draw (of 1.0 million barrels), the WTI crude contract extended streak to five days of lower settles as was off $0.82 (to $74.62). Another significant detail from the weekly EIA numbers showed that refinery utilization rates in the U.S. were calculating at 85.9% (after being at 91.6% the previous week). This is a multimonth low and does suggest that some winter refinery maintenance has begun. Products were mixed as ULSD distillates fell $0.0127 (to $2.4715) while RBOB gasoline did show a small gain of $0.0078 (to $2.0656).
