US cash products mixed ahead of holiday weekend, Hurricane Dorian landfall

Houston — US cash markets moved in mixed directions Friday before a three-day weekend and impending landfall for Hurricane Dorian.

Gulf Coast diesel on Colonial Pipeline was assessed at NYMEX October ULSD minus 3.25 cents/gal, up 15 points day on day and its highest mark since reaching the same level June 16, 2018.

Dorian was a category 3 hurricane as of Friday afternoon, and was expected to reach Florida by Monday, according to a National Oceanic and Atmospheric Administration notice.

"Additional strengthening is forecast, and Dorian is anticipated to remain an extremely dangerous major hurricane while it moves near the northwestern Bahamas and approaches the Florida Peninsula into early next week," the notice said.

Jet fuel fell Friday due the expected demand destruction that will be caused by the storm.

Platts assessed benchmark USGC jet at NYMEX minus 3.40 cents/gal, down 90 points from Thursday.

If Dorian hits Florida as expected, the jet fuel demand loss should run about 10,000 b/d, according to Platts Analytics.

"Definitely," said a jet trader of demand destruction due to the storm. "Florida is a decent demand center. I would expect a bump back up the week after with make-up flights, but it won't offset the full loss."

A second trader expressed concern that Dorian might cross Florida and continue into the Gulf of Mexico, affecting even more energy infrastructure over the Labor Day weekend.

Dorian hit Puerto Rico Thursday, but the island was already supplied with jet fuel. The Evie PG delivered 67,909 barrels on August 2 on behalf of Atlantic Trading and Marketing, Platts Analytics and Platts trade flow software cFlow showed.

GASOLINE IN CALM WATERS

USGC gasoline differentials moved lower, with benchmark CBOB falling 1.65 cents to be assessed at NYMEX October RBOB plus 0.50 cent/gal. Conventional grade was assessed 1.75 cents lower at October futures plus 9 cents/gal.

Market sources said the hurricane may kill some demand.

"We have to see what the storm does," a broker said. "[Colonial cycle] 51 will not be affected, which is why we see the fall."

The waters remained calm in the USGC gasoline blendstocks market with no impact yet felt in the blending pool.

"Will see the effect Tuesday," a source said.

Alkylate barges DAP Houston were assessed unchanged Friday at pipeline gasoline plus 23 cents/gal. Reformate barges moved 1 cent/gal lower day on day to pipeline gasoline plus 47 cents/gal.

A second source was skeptical any impact would be felt on the USGC.

"The Florida market is a market that is kind of on an island," he said. "And it all depends on where that storm goes after Florida."

But if the storm crosses back into warm Gulf waters, then eastern gulf coast states could be hit ? impacting the lower parts of the Mississippi River, a third blendstocks market source said.

"As a trader I would not be short going into the long weekend," he said.

Atlantic Coast gasoline markets were unfazed on Friday afternoon.

"The market doesn't seem to care much about the hurricane," a source said.

Benchmark barge New York Harbor RBOB was assessed at NYMEX October RBOB plus 11.15 cents/gal, jumping 11 cents to normalize to a new futures contract.

"The hurricane is still a few days away from the Florida coast, and if its trajectory or strength change, we may see more movement across Atlantic Coast grades," the source said.

--Staff report, newsdesk@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com