Severe winter weather impacts on refining operations at the U.S. Gulf Coast, New York Harbor and across the U.S. Midcontinent are a work in progress Tuesday after some of the most brutal temperatures in years. It's not clear whether refinery downtime will be measured in hours, or days and weeks, but sellers have withdrawn offers until the processing picture becomes clear.

Buyers are not chasing crude even though there was further violence in the Middle East over the weekend with more Houthi attacks on shipping as well as a Houthi missile strike in Iraq. Crude oil benchmarks moved higher after that news, but lower numbers were witnessed in the last few hours. Any refinery downtime will impact U.S. crude stocks which remain quite high when compared to historical commercial levels.

A strong dollar is also impacting crude benchmarks. February West Texas Intermediate was down 27cts at $72.41/bbl while March Brent gained 16cts to $78.31/bbl.

The day began with widespread reports of a fire and explosion at the Phillips 66 Bayway, N.J., refinery, but it wasn't clear how much gasoline and distillate production was affected. Refined products margins widened thanks to a 3.8ct surge in February ULSD to $2.7073/gal. The February RBOB contract rose 2.93cts to $2.1496/gal. While there is talk of as many as a dozen refineries that suffered cold weather problems, traders looking ahead see a warmer-than-normal week from Jan. 22 until month's end.

Beyond the futures market, Gulf Coast gasoline saw basis discounts narrow to 8.5cts, putting spot CBOB around $2.065/gal. It appeared as though problems with power in Port Arthur and Galveston Bay, Texas, were behind the stronger numbers.

This week is seeing a lot of diesel molecules head to the heating oil market, but the colder-than-normal temperatures on the Eastern Seaboard are likely to give way to a more temperate forecast shortly.

So far Tuesday, there have been no additional reports of U.S./Houthi encounters. Any such headlines could turn crude markets around quickly, observers say.


This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.


--Reporting by Tom Kloza, tkloza@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com


(END) Dow Jones Newswires

01-16-24 1233ET