A Category 5 Storm With 160 MPH Winds This Morning Is Going To Do Huge Amounts Of Damage To Tampa Bay

The biggest weekly rally of the year was followed by the biggest one day selloff of the year for crude and diesel prices Tuesday as signs emerged that Iran’s energy infrastructure may not be the target of Israel’s promised retaliation.

Iran has reportedly returned multiple tanker ships to its largest export terminal, in a signal that they believe the Israeli’s will not target those facilities after the US President walked back comments made last week about targeting Iran’s energy infrastructure. Meanwhile, Iran’s foreign minister is visiting Saudi Arabia today, in a test of the recently reopened diplomatic relations between the two rival nations.

Adding to the easing of escalation fears this morning are reports that Hezbollah has endorsed a cease fire agreement that isn’t contingent on Gaza, in a sign the group is ready to concede after several of its leaders have been killed in the past few weeks.

A slight shift south in Milton’s path may help prevent a worst case scenario for Tampa Bay, but the forecast error cone still shows the possibility of a direct hit that would push a 10-15 foot wall of water through the bay. Regardless of position, a category 5 storm with 160 mph winds this morning is going to do huge amounts of damage to the region and it will take a couple of days to know whether or not the fuel terminals that support the area will be able to return to service quickly. In addition to Milton, the NHC is tracking Hurricane Leslie and 2 other potential storms, but none of those appear to be a threat to land. See maps below.

The EIA lowered its price forecasts for oil and products in its monthly Short Term Energy Outlook, blaming a slowdown in global economic growth while also acknowledging the risks of escalating violence in the middle east. Those lower fuel prices will be good news for US consumers, with the estimated share of energy expenses to GDP forecast to dip to the lowest level of the past 20 years excluding the COVID lockdowns. The story isn’t as good for fuel sellers however as the report highlights compression in both wholesale and retail fuel margins as the US works through the latest excess of refining capacity amidst sluggish domestic demand. Charts below.

The API reported a large build in US crude oil inventories last week of nearly 11 million barrels, in what could be a sign of how dependent the US is becoming on crude oil exports to balance supply and demand as shipping delays from multiple hurricanes disrupt the normal flow of fuels. The report estimated diesel inventories declined by 2.6 million barrels, while gasoline inventories dropped by 557,000 barrels. The DOE’s weekly report is due out at its normal time today, but will be delayed a day next week due to Columbus getting lost.

Flint hills reported a leak in a cooling tower at its Corpus Christi refinery Tuesday, which resulted in a full day of flaring as engineers worked to correct the issue. It’s unclear if other units were forced to slow rates as the issue was addressed, but since Corpus facilities aren’t connected to Colonial, they typically don’t influence USGC basis markets anyway. Meanwhile, Alon/Delek’s Big Spring refinery reported its 2nd upset of the week, this time in a sulfur recovery unit.

If at first you don’t succeed: Couche Tard has upped its bid to buy 7-11 to $47 billion.