Winter Weather Continues to Dominate Headlines

On January 29, 2014 by TradingDesk

Winter weather continues to dominate the headlines, and wreak havoc on energy markets across the US. To get a feel for how widespread the impact has been, overnight Philadelphia Energy Solutions reported a shutdown of 3 units at its Philadelphia refinery, Citgo reported issues due severe weather at its Lemont IL plant, and Motiva reported that it would delay maintenance at its Norco LA facility due to frigid weather. This is in addition to reports that PBF continues to struggle to bring its Paulsboro NJ plant back online after the cold knocked several units offline last week. Meanwhile, the spike in demand for heating fuels continues, holding Natural Gas prices at a 4-year high, and helping ULSD maintain its record spread between prompt and forward month prices.

Meanwhile, a financial storms appears to be brewing in emerging market economies, with a surprise interest rate hike by the Turkish central bank action sending shock waves across European markets. US equities are poised to open lower, wiping out yesterday’s recovery rally, which has helped cap another overnight rally attempt in RBOB and ULSD futures. The FOMC is expected to announce another $10 billion reduction in its monetary stimulus today (reducing their monthly purchases to “only” $65 billion) in Ben Bernanke’s last meeting as Chairman of the FED.

WTI is dropping today, with several analysts suggesting this is due to the Keystone XL pipeline – long hoped to be a major piece to the solution for relieving the glut of Western Canadian and Bakken crude – not being mentioned during the State of the Union address. After 5 years of delays in a ruling on allowing the pipeline to cross the US/Canadian border, it seems that a decision is not likely any time soon.

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