After snapping a 9 day winning streak in the first trading day of 2018, energy futures are ticking higher again this morning as a winter storm bears down on the US and protests in Iran continue to escalate.

The weather across much of the US is going from bad to worse this week as record cold gives way to a large winter storm that’s expected to bring ice and snow from Florida to Maine.  The good news is that the hurricane force winds are expected to stay off shore, which should minimize any longer term impacts to energy supplies.

Diesel demand across the eastern half of the country is spiking as heat and power generating systems switch to burning heating oil as regional natural gas supplies can’t keep up with the spike in demand short term, even though nationwide supplies are seen as ample.  Prices for space on Colonial’s main diesel line spiked north 4 cents/gallon yesterday as suppliers race to bring replacement barrels from the gulf coast.

This type of event is a double edged sword for refiners.  On one side they’re definitely benefitting from the best winter diesel demand spike in 3 years, while on the other they risk further destruction to gasoline consumption as drivers stay off the roads.  So far reports of refinery issues have been minimal, although it seems unlikely the Gulf Coast refiners will come through this unscathed since most are not insulated to handle this type of a front.

We’re also seeing a rash of terminal issues across much of the country as equipment breaks down in the cold.  Vapor recovery units in particular from Tennessee to New England seem to be going off-line frequently, stranding trucks waiting to load.

Today’s interesting read:  Is the US a bigger wildcard than Iran for oil prices?

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