General index, Crude Oil Data

Global Market Analysis, 01 July 2022

This week's analysis comes from North America and looks at the potential impact hurricane season and July holidays could have on gasoline, diesel and jet fuel prices.

Summer kicks off with hurricane guessing games

By Jeffrey Bair

Welcome back to the Land Of If.

If the tropical system now steaming toward the Gulf of Mexico makes a hard right toward Texas and Louisiana, gasoline and diesel are sure to go up. And if this happens, the storm will be named Bonnie.

But with every if, there is a but.

Here it is. The storm that started the 2022 hurricane season would arrive in a climate of falling prices and stout refinery runs. Either will tame the impact of storm clouds and associated refinery interruptions.

General Index, US Refinery Utilisation

The primary US gasoline futures contracts fell Thursday with the trend reaching into January 2023 value, especially the prompt numbers. Retail pricing has backed dramatically off this year’s record prices, and this has silenced talk of $6 national gasoline average.

The storm was less than 60 miles north of Curacao Thursday afternoon and didn’t even have enough mojo to have a name yet. Like the creaky old song says, “My Bonnie lies over the ocean,” and she’s getting closer as a concept, even if she is anonymous.

Some tracking has the system crossing Central America soon and going further west away from the US refineries. Doomsayers are usually ready the potential for storms like this to turn north when they reach the coast.

If there’s a storm in the water, it’s great timing to watch fuel value. You know the principals in trade markets already are. Markets seem poised to weather the storm if that happens.

US jet fuel demand strong ahead of Fourth of July holiday

US jet fuel markets are coming off the second-best week of the pandemic for demand.

Jet demand, as reflected by the proxy fuel supplied to the market, hit 1.613 million barrels a day as a moving average in the week ending June 17.

The data was delayed by a week because of a technical problem in the reporting agency.

General Index, US Jet Fuel Demand

In pandemic scope, the mid-June number was topped only by the jet demand for Labor Day 2021. And it reflects the best non-holiday number yet in the pandemic market. July 4 numbers for the coming weekend are likely to further push the threshold and be bullish for US refiners and airlines.

The rise in demand comes as jet fuel markets have softened in value with more supply reaching the airport tanks. Premiums to futures of more than $4/gal were briefly seen this spring in New York trade. That value has fallen back to a discount to the Nymex ULSD contract as of June 28.

Zulfadhli Kader
Jeffrey Bair, Pricing Director, Americas Refined Products
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