OIL FUTURES: NYMEX products retreat amid reports of Marathon restarting Garyville units

NYMEX refined product futures settled sharply lower on Aug. 28 as the market shed risk premium amid reports that Marathon Petroleum was preparing to restart units shut late last week following a fire at its 596,000 b/d Garyville, Louisiana refinery.

NYMEX September RBOB settled down 8.07 cents at $2.7957/gal and September ultra low sulfur diesel finished 10.38 cents lower at $3.2037/gal.

Refined product futures surged in aftermarket trading Aug. 25 after Marathon Petroleum began shutting down units at its Garyville refinery on Aug. 25 after a naphtha release and tank fire earlier in the day at the facility.

However, media reports indicated the fire was contained over the weekend and that Marathon was preparing to restart the shuttered units. Marathon Petroleum could not be reached by S&P Global Commodity Insights for comment.

Diesel cracks remained elevated, however. The ICE NYH heating oil crack versus Brent was holding around $48.99/b late Aug. 28, down sharply from a close of $52.75/b on Aug. 25 but still around $1/b higher from its Aug. 24 close.

Meanwhile, crude futures settled mixed after trading modestly higher overnight. The front-month NYMEX October WTI contract settled 27 cents higher at $80.10/b, while the ICE October Brent contract dipped 6 cents to finish at $84.42/b.

US crude futures saw some support from concerns surrounding the potential impact Tropical Strom Idalia could have on US Gulf Coast production.

Chevron began evacuating non-essential personnel from their Blind Faith and Petronius platforms on Aug. 28 ahead of the storm, which is expected to strengthen into a hurricane along Florida's Gulf Coast, accompanied by potentially destructive winds as it moves onshore.

According to the National Hurricane Center, the brewing storm is expected to see hurricane conditions by Aug. 28 and move onshore by Aug. 30, bringing potential flash and urban flooding in parts of Florida, Georgia and the Carolinas.

Other producers including Shell, W&T Offshore and BP could not be reached for comments.

Generally, Idalia appears to be steering clear of the USGC's offshore producing areas. However, producers will likely take precautions with eastern Gulf of Mexico facilities, as they did in September 2022 ahead of Hurricane Ian, which also made landfall on Florida's western coast. At its peak, Ian caused producers to briefly shut in roughly 190,400 b/d of crude and 184,000 Mcf/d of natural gas, equivalent to 11% and 9% of US Gulf of Mexico output, according to the US Bureau of Environmental Enforcement.

Crude futures were trading higher overnight after Beijing moved to boost investor confidence by reducing the stamp duty on stock trading from Aug. 28.

"[The move] provided the necessary boost to the markets and helped to restore investor confidence," Phillip Nova's Market Research Analyst Priyanka Sachdeva said Aug. 28, noting that the oil market cheered the announcement despite longstanding concerns over the state of China's overall demand recovery.