Fire at Tulsa Refinery Disrupts Production
December 17, 2024
The markets have entered the holiday season with limited traders and light volumes. Yesterday was a quiet day, and as this week wears on, the activity will slow down. Then it will get worse as we go through a short trading week next week with Christmas right in the middle of the week. The following week puts New Year’s Day in the middle of the week. It is fair to say that it will not be until the week of January 6, 2025, that we get some semblance of a “normal” market.
These markets are doing just enough to keep us guessing. Yesterday, these markets rallied up to test the first level of resistance, and with more upside, these energy markets could give us another test higher. But despite this, we are still sitting here with more questions. The bottoming line is these markets are stuck in congestion, and with the comments above with limited volume and traders, it is likely more of the same for three weeks, and we are still waiting for answers until we get back to normal in the New Year.
The Fed is expected to cut rates by 25 points this week, which should support energy.
A fire broke out at Holly Frontier’s Tulsa refinery Monday evening. A company spokesperson said, “At approximately 5:00 PM on December 16th, HF Sinclair responded to an operational upset that led to a fire at our Tulsa West refinery. Our response team immediately followed the process, extinguishing the fire.” It remains unclear what caused the fire, if there were any injuries, and how long a shutdown is expected to last. Group 3 ULSD and CBOB basis is up slightly this morning on the news.
Barclays lowered its 2025 fair value estimate for Brent crude to $83 per barrel. It stated that a 500,000 barrels per day deviation in demand relative to its estimates would imply a $10 per barrel swing in the $80 per barrel fair value estimates for Brent in the fourth quarter of 2025.