NYMEX RBOB leads complex lower as Colonial Pipeline returns

Crude and refined products futures edged lower Aug. 31 as Louisiana offshore and onshore recovery efforts were underway following the passing of Hurricane Ida, and ahead of an OPEC+ meeting set to start Sept. 1.

New York Harbor-delivered NYMEX RBOB futures led the complex lower, reversing the prior day's rally as Colonial Pipeline confirmed it had restarted operations, restoring the primary fuel artery for much of the US Southeast and East Coast.

September RBOB settled 3.01 cents lower at $2.2826/gal.

The price decline could also have been due to selling ahead of September contract expiration Aug. 31. The October contract settled 1.19 cents lower at $2.1419/gal.

NYMEX September ULSD settled 93 points lower at $2.131/gal.

NYMEX October crude settled 71 cents lower at $68.50/b, while ICE October Brent settled 42 cents lower at $72.99/b.

According to estimates from S&P Global Platts Analytics, about 2.2 million b/d of Louisiana refining capacity remained offline Aug. 31 following the passing and downgrading of Ida, as most plants are without power from outside supplier Entergy.

Shell reported some damage from the storm at its 230,611 b/d Norco, Louisiana, refinery.

Phillips 66 also reported some water had breached its 255,600 b/d Alliance refinery located outside New Orleans.

In the offshore Gulf of Mexico, roughly 1.7 million b/d of crude production remained offline Aug. 31, 94% of total GOM output, according to the US Bureau of Safety and Environmental Enforcement. That was down slightly from 1.72 million b/d the prior day.

"Crude prices are stuck in wait-and-see mode until energy traders have a better handle of what will be the full impact of Hurricane Ida with US production," Edward Moya, OANDA's senior market analyst, said in an Aug. 31 note.

The return of offshore production could face delays as Port Fourchon, Louisiana, took a near-direct hit from Ida. The port is a key hub of supplies and equipment, and a transportation point of entry and exit to and from the Gulf.

The OPEC+ alliance is scheduled to meet Sept. 1 to decide whether to press on with plans to hike crude production by 400,000 b/d every month, as it seeks to eventually eliminate its historic output cuts implemented at the start of the coronavirus pandemic.

OPEC continues to forecast robust oil demand in the months ahead, bolstering the case for the bloc and its partners to keep raising output.

"With lots of demand uncertainty, OPEC+ can afford to be patient since peak driving season is behind us, corporate travel is not bouncing back just yet, and with an uncertain holiday travel season outlook," Moya said.