Petroleum Futures Sinking This Morning

Petroleum futures are sinking lower this morning with refined products leading the way, exchanging hands 1.3% below yesterday’s settlement. The market seems to believe Israel’s claim that their overnight jaunt across the Lebanon border is in fact a limited invasion with the specific, predetermined goal of pushing Hezbollah's presence away from its Northern border. However, it should be noted that this claim has been made twice before, in 1982 and 2006, both of which turned out to be massive military operations that penetrated deep into Lebanon. All of that is to say the chances of this conflict inflaming to involve oil-producing countries, specifically Iran, just increased.

Traders are instead eyeing the prospect of Libyan oil production recovery, which is expected to return today according to a deal made between the nation’s factions on who should be running their Central Bank. OPEC+ leadership is scheduled to meet tomorrow and retain their plan to raise production across their member nations (and friends) by 180 thousand barrels per day.

Amber Energy was selected as the winner of Citgo’s court-mandated auction, but the $7.3 billion acquisition is pending Federal approval and has some regulatory hurdles left to clear before the deal is expected to close in mid-2025. Amber claims they intend to maintain and expand on the more than 110-year-old brand and its operations. Amber’s parent company, Elliot Management has involvement with Marathon, P66, Suncor, Hess, etc., so this isn’t their first venture into petroleum businesses.

Speaking of Hess, the FTC approved Chevron’s purchase of Hess Corp. yesterday but won’t allow their CEO to sit on Chevron’s board of directors due to his questionable OPEC dealings. The last roadblock potentially barring the deal from going through is a dispute regarding the sale of Hess’s assets in Guyana that led to record production for ExxonMobil. That hearing is set for May 2025 with a final decision not expected until this time next year.

Tropical storm Kirk was named yesterday and its projected path has it heading North in the middle of the Atlantic as it grows to be a major hurricane later this week. There’s another system following the 11th named storm this season with an 80% chance of cyclonic development over the next 48 hours. However, since it’s a week entering our hemisphere, attention is squarely focused on the area of the storm brewing in the Caribbean, forecasted to start rotating over the next week as it enters the Gulf. The area under observation has already produced one major hurricane this year, one we are still reeling from.