Spot prices for refined products throughout the US moved in varied directions Feb. 17, one day after surging in unison as a winter storm knocked out power for millions across the country.
Around 4.4 million b/d of refining capacity was impacted by the storm, including more than 2 million b/d shut because of power loss. Severe weather continued to plague the Southern and Eastern United States, with winter storm warnings from the National Weather Service in effect from Texas to New York Harbor.
US Gulf Coast diesel continued to climb, jumping 1.15 cents at NYMEX April ULSD minus 2 cents/gal. This marked the strongest it had been since Nov. 6, when it was assessed at futures minus 1.85 cents/gal.
In the Midwest, Tulsa, Oklahoma, diesel at March futures plus 2.25 cents/gal, up 90 points/gal on the day and a one-month high. Chicago pipeline diesel rose to a two-month high, jumping 1.25 cents/gal to be assessed at March futures plus 2.50 cents/gal.
Trading for USGC gasoline switched Feb. 17 to NYMEX April RBOB, representing specifications for the more expensive summer blend. This skewed values for cash prices, yet another adjustment for the market to make.
USGC finished gasoline added 6.10 cents/gal to reach a one-year high outright price of $1.8113/gal. Most active market participants said they experienced difficulties with services at their homes and that market activity was scarce.
"It is kind of a messy thing out there," a trader said.
Finished gasoline coming off Colonial Pipeline for delivery along the Atlantic Coast rose 25 points to March futures plus 2.35 cents/gal, a two-week high.
Demand spikes for ultra-prompt jet supply
The outright USGC jet fuel reached its highest price in more than a year as refiners hurt by weather outages sought prompt barrels to meet commitments.
The benchmark was assessed at $1.6663/gal, the highest outright price since Jan. 23, 2020, when it was $1.7173/gal. But trading in the differential basis, which spiked 4.25 cents Feb. 16, shifted to Colonial's 14th shipping cycle Feb. 17 and dropped 1.25 cents to April futures minus 15.75 cents/gal.
Given the length between trading and delivery into the Houston-to-New York pipeline, refiners were eager to find even earlier barrels, those heading for injection or already on the line. Several brokers said activity was exceptionally strong on sub-scheduling cycles 11 through 13, with each closer-in cycle heard trading at 50- to 75-point premiums to cycle 14. Colonial cycles last an average of five days, but the product can be injected up to Alabama.
"Because of all the outages, refiners have to cover what they can't make," one USGC jet trader said. He noted that fulfilling the commitments outweighed any loss of demand from thousands of flight cancellations during the week.
A jet broker added that traders, like everybody else, are dealing with power, Internet and water outages. How many "is hard to say, but more than I or they are comfortable with," he said. "It's crazy, no matter what."
All flights at Houston's Hobby Airport were cancelled or diverted, while data from FlightAware show over 300 flights at George Bush Intercontinental Airport were cancelled on Feb. 17. Dallas-Fort Worth Airport was the only airport with more cancellations in the US, with FlightAware placing the number at approximately 500.
In the New York Harbor area, the weather service has said there is "potential for a moderate to heavy snow event," with expectations for up to six inches of snow. No mass cancellations were seen at any of the three major airports in the tri-state area.
Nearly 2,500 flights were cancelled across the country on Feb. 17, down from 2,800 the prior day, according to FlightAware.
