Supply Alert – Southeast / TS Nicole / Midwest – Level 4

Fuel supplies around the US are currently facing a variety of challenges that are putting separate regions of the country under alert. From tropical storm threats to refinery outages, markets face fuel supply pressures that have put 12 states on Code Red. Mansfield remains on Level 4 Alert, the second highest level of operational preparedness, with teams devoted to securing supply and freight in real-time and tracking deliveries in impacted areas.

Florida

Tropical Storm Nicole is currently heading towards eastern Florida, where it will make landfall between Fort Lauderdale and Daytona Beach. Nicole is on track to strengthen into a Category 1 storm before making landfall late on Wednesday or early Thursday morning. Ports are preparing by issuing their own alerts, moving to port condition “Yankee” which means gale-force winds will arrive within 24 hours. After making landfall in Florida, Nicole is forecast to make its way northward, bringing potential flash flooding in parts of Georgia and South Carolina.

Florida’s fuel markets are almost entirely fed by barge, so the storm will temporarily delay new deliveries into key markets. This is typical during storms, and markets are equipped to handle the delay in re-supply shipments. Ahead of the storm, Mansfield is moving Florida to Code Red to allow additional time for deliveries to be made in light of delivery delays associated with the storm’s strong winds as it approaches.

Southeast

Conditions remain the same in the Southeast, with diesel supply still impeded and various markets facing challenges with supply allocations. Market backwardation and extremely high NY Harbor prices have limited pipeline deliveries in the Southeast and pulled product northward, leaving less availability for southern states.

Outages across suppliers and terminals have kept supply volatile, contributing to wide low-average-high spreads within Southeastern markets. Expanding spreads between suppliers contribute to more volatile prices and dispatch changes, causing delays and requiring additional delivery lead time. At this time, Mansfield is still requesting 72-hr lead time for new deliveries in Southeastern states.

Midwest

In the Midwest, a refinery fire in September has contributed to tight gasoline and diesel markets. The challenges have been ongoing in this region, and recently fuel prices have been rising to 70+ cents above NYMEX levels. Historically low water levels on the Mississippi River have limited water shipments of fuel.

Gasoline inventories in PADD 2 Midwest hit 32-yr lows in September, with only moderate improvements since then. Nearby states including South Dakota and Iowa have declared states of emergency to waive truck regulations to allow unimpeded flow of fuel due to shortages.

Mansfield expects supplies to remain tight in the Midwest for at least the next few weeks. Mansfield is moving Michigan, Indiana, Ohio, and Kentucky to Code Red to allow time to secure supply at regional terminals.

 

Market Condition Report - Disclaimer
The information contained herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Furthermore, no responsibility is assumed for use of this material and no express or implied warranties or guarantees are made. This material and any view or comment expressed herein are provided for informational purposes only and should not be construed in any way as an inducement or recommendation to buy or sell products, commodity futures or options contracts.

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