Oil Prices At Lowest Of The Year

Monday’s tariff-induced price spike in energy markets proved short lived as both Canada and Mexico negotiated a 30-day delay to the new taxes giving negotiators time to work out a longer term deal.

The initial tariff news sent shockwaves through markets around the country, and in particular the North Eastern U.S. which is heavily dependent on Canadian product imports, only to have 2 days of frantic scrambling all prove to be for nothing as those new fees didn’t take effect this morning.

While refined products have simply given back the tariff panic gains, oil prices are sliding to their lowest levels of the year this morning, following OPEC’s monitoring committee noting plans to continue on the path of beginning to unwind voluntary production cuts in April and China’s announcement of 10% retaliatory tariffs placed on U.S. crude oil imports.

Don’t trust the EIA’s data? Neither does OPEC, who agreed to drop the agency from its list of secondary sources used to solve disputes amongst members on actual oil output. Many will see that move as politically motivated (similar to removing the IEA from the data sources a few years ago) while others will note it’s part of the cartel’s routine, and the EIA themselves have noted their struggles with tracking US oil production.

Investigations are ongoing into the cause of Saturday’s fire at PBF’s Martinez CA refinery. Energy News Today is reporting the entire facility was forced to shut down, and may require a rebuild of the hydrotreating unit that caught fire. San Francisco spot markets were relatively subdued Monday with gains of only 2-3 cents in differentials despite the potentially significant disruption at one of the last 3 refineries standing in the region, which could be because the facility was already preparing for maintenance, or because focus was on the tariff excitement, or simply because it’s February and demand in the area is in the winter doldrums.

Flint Hills reported a leak in a jet fuel transfer line at its Corpus Christi refinery overnight that spilled approximately 1500 barrels. It appears the spill was contained and production units at the refinery weren’t affected by the spill.

P66 reported another upset at its Borger TX refinery, it’s 4th of the new year, this time in an FCC unit with assessments still underway as to the cause. Supplies in the W. Texas and New Mexico markets have tightened up significantly in the past several weeks as issues at P66 Borger, Alon Big Spring, Valero McKee and HFS Artesia have all reduced deliveries at a time of year when products are typically ample.

Marathon reported its 4th quarter results this morning, following the trend of drastically lower refining earnings, which were partially offset by strength in their midstream segment. In total the company posted $371 million in Net Income for the quarter, down from $1.15 billion a year ago. One bright spot was that after 7 consecutive quarters of losses, the company’s renewable diesel segment moved into positive territory as the surprise loss of imports into California in the 4th quarter boosted domestic producers considerably prior to the BTC expiration bursting their bubble. The company also noted that its upgrade projects at its Galveston Bay TX (2027) Los Angeles CA (2025) and Robinson IL (2026) are all progressing on schedule.