Markets have appeared to take every geopolitical risk headline the same way the kids take my advice…. “whatever”.
As Libya appears to be on the brink of civil war, Isreal still has no end in site with their fight, and Houthis are still targeting random vessels in the Red Sea, market players are now assuming that these events have no real effect on a supply disruption. It is almost as if they have become numb to it. Instead they are focused on several reports that members of the OPEC+ cartel will begin to systematically unwind self-imposed production cuts with the intent of flooding the market. This could push Crude pricing below $60 a barrel for the first time in years. Does that then force US refiners to cut back due to low refining margins? Margins, that currently, are not all that impressive. Crude is trading at $69.39, OCT RBOB (gasoline) is $1.9552, that means a refiner will make $12.72 for every barrel of gasoline made, called a Crack Spread. Refiners live and die by these and historically, they are comfortable above $20 a barrel. The timing of which, you also can’t help but think the action of OPEC has Political undertones.
Still, with USLD futures trading at yearly lows, looking at Q4 and Q1 fixed gallons is prudent. With our 24x7x365 Sales, Customer Service and Dispatch, we are always here to help.
