NYMEX RBOB climbs as Hurricane Ida shuts Colonial Pipeline

NYMEX RBOB futures opened sharply higher Aug. 29 as a powerful Hurricane Ida forced the partial closure of the Colonial Pipeline, a key refined artery supplying the south and east coasts.

At 2209 GMT, NYMEX September RBOB was 7.40 cents higher at $2.3482/gal and September ULSD was up 3.21 cents at $2.1413/gal.

Ida was upgraded to a major Category 4 hurricane with maximum sustained winds of 150 mph on Aug. 29, according to the US National Hurricane Center, before making landfall south of New Orleans near Port Fourchon just before noon CT as one of the most powerful storms to ever hit the US Gulf Coast. By 4 pm CT, Ida remained at Category 4 strength, but the sustained winds were down to 130 mph.

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Colonial Pipeline -- the primary fuel artery from Houston to the South and East Coast -- said Aug. 29 it temporarily shut down its Lines 1 and 2 systems from Houston to Greensboro, North Carolina. Colonial said the rest of the network from North Carolina to New Jersey is operating normally. Colonial said the closure is precautionary and should resume full service after Ida passes and the system is evaluated.

The pipeline shutdown comes as US Atlantic Coast gasoline inventories are already historically tight.

USAC gasoline stocks fell to 56.38 million barrels in the week ended Aug. 20, according to the US Energy Information Administration, leaving them nearly 13% behind the five-year average.

The ICE New York Harbor RBOB crack versus Brent rallied to $17.75/b in early trading Aug. 29, up from an Aug. 27 close of $16.32/b.

NYMEX October WTI was up 51 cents at $69.25/b and ICE October Brent was 73 cents higher at $73.43/b.

The US Bureau of Safety and Environmental Enforcement said Aug. 29 that 95.65% of the US Gulf's crude oil, or 1.741 million b/d, already was shut in, as well as 93.75% of the region's approximately 2.2 Bcf/d of natural gas production, or about 2.091 Bcf/d. An estimated 288 offshore platforms were evacuated -- 51.4% of the US Gulf's total.

But this tightened supply was offset, in part, by lower near-term demand resulting from the storms impact on regional refineries.

Close to 4.4 million b/d of operating refinery capacity is in the path of Ida as well, primarily in Louisiana, and at least half of that at-risk capacity came offline ahead of Ida as Phillips 66, Shell, ExxonMobil, Valero and others closed refining units. Ida's wind speed will play a major role in how hard it strikes at the heart of USGC refining centers, according to S&P Global Platts Analytics. The greatest impacts are expected in the eastern Louisiana refining and petrochemical hubs from Baton Rouge to New Orleans and potentially to Mississippi.

Thus far, Shell said Aug. 28 it was closing its 230,600 b/d refinery in Norco, Louisiana, and Phillips 66 already had shuttered its 255,600 b/d Alliance Refinery in Belle Chasse, Louisiana.

ExxonMobil said late Aug. 28 it was shutting some units at its 520,000 b/d Baton Rouge plant. And Valero Energy spokesperson Lillian Riojas said the company's 215,000 b/d St. Charles refinery in Norco and its 125,000 b/d refinery in Meraux, Louisiana were closed ahead of Ida.