MARKETWIRE ALERTS
Maria Eugenia Garcia
DTN Energy Editor
MARKETWIRE ALERTS
MarketWire Afternoon News Oct. 30th:
Updated at 6:00 PM ET
HEADLINES:
Wolverine ULSD Jumps 25cts Amid Mixed Midwest DistillatesExxonMobil USGC to Add
100,000 Bpd Distillate Yield Baker Hughes: Weekly N. America Rigs Rise 6 to
829Analysis: Oil Markets Brace for Post-Election U.S.Shell Refining Runs 99%
YTD, Maximizes DieselExxon Q3 Profit Doubles YoY on Energy ProductsValero Plans
165,000-Bpd Houston Refinery RestartBP Q3 Replacement Profit Quadruples On
Margins, TradingChevron US Refinery Throughput Hits 1M Record in Q3DOE Awards
Over 40M Bbl in SPR Crude ExchangesWeekly Rack Recap : Diesel Drops 23.07cts;
Gas Off 4.29cts
NEWS:
Wolverine ULSD Jumps 25cts Amid Mixed Midwest Distillates
Ultra-low sulfur diesel (ULSD) on the Wolverine pipeline witnessed the
largest move up in Midwest fuels Friday (10/30), surging 25cts to settle at an
85cts gallon premium over the December NYMEX ULSD contract, amid divergence in
distillates pricing across the region.
Buckeye Complex ULSD basis dropped 30cts to a 30cts gallon premium over
December futures, while Chicago ULSD basis slipped 10cts to settle at a 50cts
gallon premium.
Group 3 ULSD (X grade) basis gained 17cts on the session to trade at a 26cts
gallon premium over December futures
Traders pointed to an absence of market alignment across regional pipeline
systems as localized supply dynamics dictated physical differentials.
"Everything is fundamentally disconnected right now, with no sync at all
between the lines," a Midwest fuels trader told DTN.
Individual pipeline deals within Chicago illustrated the wide internal
spread, with West Shore ULSD trading up to 60cts over December futures while
Badger ULSD traded at a 20cts premium.
In jet fuel, Chicago flat on the day at a 10cts gallon discount to December
futures. Group 3 jet fuel advanced 13cts to settle at a 35cts gallon premium.
Baker Hughes: Weekly N. America Rigs Rise 6 to 829
North American energy drilling activity rose by six rigs to 829 in the
current week, Baker Hughes' weekly rotary rigs report released Friday (10/30)
showed.
Compared with the corresponding week of 2025, combined rigs for Canada and
the United States were up 96 from the 733 units active during that period,
according to the report.
This week's increase was driven by Canada adding six rigs to 226, while the
U.S. rig count was unchanged at 603.
Oil-directed U.S. rigs rose by two to 462, while gas-directed drilling fell
by two to 130. Miscellaneous rigs were unchanged at 11.
By trajectory, U.S. horizontal rigs fell by one to 527 and directional rigs
declined by two to 52, while vertical rigs increased by one to 22.
Analysis: Oil Markets Brace for Post-Election U.S.
Energy market participants are repositioning themselves ahead of next week's
U.S. midterm elections -- the results and after-effects of which could result
in sweeping changes for the oil complex.
Growing signs the U.S.-Iran war is set to enter a new phase following the
elections -- perhaps even independently of its outcome -- is keeping the market
squarely focused on geopolitical impacts and supply risks.
With the Republican government trifecta very likely to end with all 435
seats in the House of Representatives and 35 of 100 Senate seats up for grabs,
the executive branch is not only bracing for an avalanche of legal challenges
but will have to contend with wielding considerably less political capital.
Domestic energy and environmental policies, however, are far from being at
the forefront of oil traders' minds, as high prices and war-induced supply
disruptions have this year shaped the market significantly more than the
slashing of regulations or the granting of drilling licenses.
Iran War
Notwithstanding the changes to Congress and Senate, risks of a re-escalation
in the U.S.-Iran war after the elections have been mounting. Some observers
have attributed the recent U.S. military constraint toward Iran to an attempt
to soften the war-induced political fallout on the domestic front, a
consideration that would lose relevancy after November 3.
U.S. President Donald Trump, who on the campaign trail this month struck an
increasingly bellicose tone vis-a-vis Iran, has been briefed multiple times on
strike options, including on Thursday by the head of central command. Trump has
said the U.S. may deliver a decisive blow to Iranian forces after the election.
In addition, several reports over the past few weeks have indicated that
Israel and Washington were independently reviewing strike options for November
-- suggesting that their intense 40-day air raid through early April against
Iran might recur. With Trump ally and Israeli Prime Minister Benjamin
Nethanyahu set to remain in office after this week's election unless unseated
by an opposition coalition, the likelihood of a renewed joint campaign by the
two against Iran only grows.
Concerns of a reheating war and consequently worsening oil supply disruption
have been fueled by the recent deployment of a third U.S. aircraft carrier
strike group and several amphibious landing units to the region, expected to
reach Iranian shores by the end of November.
While largely in the hands of the executive branch, the outcome of the
midterm elections can also contribute to a reshaping of Iran policy, with a
majority Democratic Senate likely to push for a diplomatic resolution.
Russian Sanctions
The White House's move earlier this month to suspend sanctions on Russia and
grant a general license allowing for U.S. imports of Russian diesel was met
with harsh criticism even among Republican ranks. The new sanctions bill, which
was suspended via executive order just days before it was set to be enacted,
had passed both chambers of Congress with bipartisan support, and was sponsored
by some of the President's closest political allies.
Opinion polls and betting markets are predicting the Democratic party to win
a majority of House seats in next week's midterm elections, and are attributing
a high likelihood to the opposition party also retaking majority control of the
Senate. Unless the Oval Office intends to govern exclusively via executive
order, a Democratic Senate majority drastically increases the chances that the
U.S. government may return to the sanctions regime it had pursued since
Russia's invasion of Ukraine in 2022.
Although Russian refiners are currently struggling to raise export volumes
anywhere close to their heyday, the loss of this diesel supply stream will
still mean a further tightening of the market. In addition, losing the Senate
could force the White House to pump the brakes on recent behind-the-scenes
efforts to reestablish economic cooperation and trade with Russia.
Domestic Policy
The oil market is also bracing for the potential of stricter regulations
affecting the entire fuels supply chain, from drilling to engine efficiency
requirements. Given the massive inflationary pressures stemming from eight
months of high oil prices, however, Democratic lawmakers may be reluctant to
immediately pursue any legislation that would further tighten the supply screws
or raise prices. Additionally, most industry players have held on to the view
that the fossil fuel friendly policies of Trump's second administration are
less the herald of a sea-change, but rather a temporary slowdown of an
inevitable transition away from oil.
The Middle Eastern oil supply disruption and its ripple effects continue to
dictate the direction of the market significantly more than regulatory changes.
Given the world is running dangerously low on cushions that can absorb future
supply shocks, short-term considerations about the Iran war are this time
likely to outweigh regulatory woes.
Shell Refining Runs 99% YTD, Maximizes Diesel
London-based Shell ran its refineries at 99% utilization in the first nine
months of 2026, versus 91% in the first nine months of 2025, and is maximizing
diesel and jet fuel yields, CEO Wael Sawan said Thursday (10/29) on the third
quarter earnings call.
The company attributed the increase mainly to lower maintenance. Shell
expects fourth quarter of 2026 refinery utilization of 92% to 100%.
Shell embeds traders in its refineries, making a single team commercially
accountable from feedstock procurement through product distribution, Sawan
said. The team adjusts to market signals that currently favor diesel and jet
fuel.
Diesel production at 404,000 bpd Pernis refinery in Rotterdam set a record
in August, while 114,000 bpd Scotford refinery near Edmonton, Alberta, set a
record for jet fuel output, Sawan said.
Shell's global indicative refining margin was $42 bbl in the third quarter
2026, up 75% from $24 bbl in the second quarter, the company reported.
Shell's integrated refining margin eased slightly in October from the third
quarter level, Chief Financial Officer Sinead Gorman said.
Spot freight from the Middle East to China costs 10 times its 2025 level,
Gorman said. Rising spot costs are starting to push down margins in refining,
chemicals and oil, she said.
According to Shell executives:
Shell's Gulf of Mexico assets produced their highest monthly volume in more
than two decades in August. However, the company did not disclose the volume.
Shell kept two assets producing through a recent hurricane by operating them
remotely at lower rates.The 2026 global Upstream outlook of 1.7 million to 1.9
million boe/d includes an allowance for Gulf of Mexico weather.Shell raised its
stake in Tri Star Energy, a convenience store operator and fuel distributor in
the southeastern U.S., to 100% from 33% in September. The deal added 320 fuel
and convenience retail sites, more than doubling company's owned U.S.
convenience sites and includes supply agreements with 552 dealer-owned
locations.On refining processes, the company uses data and AI to predict
equipment problems and act early, and it takes units out for maintenance when
the opportunity arises, even at high utilization.Higher oil prices are
anticipated as more stable because inventories are falling fast and will take
time to refill, and countries will want new stocks for energy security.The
operator will focus on offshore Venezuelan gas, instead of heavy oil output, as
new assets could tie into its existing infrastructure on the Trinidad side of
the border, including Atlantic LNG capacity.
Exxon Q3 Profit Doubles YoY on Energy Products
ExxonMobil reported on Friday (10/30) that net profit rose 104.20% from the
third quarter of 2025 to $15.4 billion in the third quarter of 2026, as
earnings from its Energy Products segment rose to $7.2 billion from $1.8
billion.
ExxonMobil also stated that:
Net profit was $14.5 billion in the second quarter of 2026 and $7.5 billion in
the third quarter of 2025.Earnings were $17.5 billion when excluding identified
items and timing effects, up 19.24% from $14.7 billion in the second quarter of
2026. Identified items added a net $449 million to net profit, including a $675
million gain on asset sales.Results were reduced by approximately $2.5 billion
in unfavorable timing effects related to derivatives, versus $2.5 billion in
favorable timing effects in the second quarter of 2026.Net production in the
third quarter of 2026 was 4.5 million boepd, down 5.72% from 4.8 million boepd
in the third quarter of 2025 and 4.5 million boepd in the second quarter of
2026.Cash capital expenditures were $7.0 billion versus $6.8 billion in the
second quarter of 2026.
Valero Plans 165,000-Bpd Houston Refinery Restart
Valero Energy Corp. plans to restart 165,000 bpd of light sweet crude
processing capacity at LyondellBasell's idled Houston refinery by the end of
2027 under a $320.5 million acquisition agreement announced Friday (10/30).
The transaction involves approximately 700 acres along the Houston Ship
Channel, adjacent to Valero's existing Houston refinery. LyondellBasell ceased
refining operations at the facility in February 2025.
Valero said the acquisition provides an opportunity to expand its U.S. Gulf
Coast refining operations, with potential future investments in more complex
processing facilities capable of handling heavier, sour crude.
The agreement, reached Thursday (10/29) through Valero's wholly owned
subsidiary, Valero Refining-Texas, L.P., is expected to close by the end of
2026, subject to regulatory approvals and customary closing conditions. The
purchase price remains subject to closing adjustments.
Valero Chairman and CEO Lane Riggs said the acquisition would allow the
company to expand its Gulf Coast refining footprint at a fraction of the cost
of constructing replacement capacity, while creating opportunities to optimize
operations across its refining system.
Under the agreement, Valero will also assume responsibility for ongoing site
operations, environmental liabilities, pension costs and other employee-related
obligations, according to LyondellBasell.
BP Q3 Replacement Profit Quadruples On Margins, Trading
BP reported on Friday (10/30) an underlying replacement cost profit of $8.5
billion for the third quarter, nearly quadrupling year-on-year, driven by
significantly higher realized refining margins and exceptional gas marketing
and oil trading results.
Replacement profit in Q3 2025 was $2.2 billion. For Q2 2026, it was $5.7
billion.The average dated price for Brent crude was $96.99 bbl in Q3 2026, up
from $69.13 bbl a year ago, but down from $103.85 bbl in the prior quarter.The
average realized price for natural gas under production on the Henry Hub was
$2.96 mmBtu in Q3 2026 versus $3.07 mmBtu in Q3 2025 and $2.90 mmBtu in Q2
2026.BP's average refining indicator margin (RIM) surged to $46.70 bbl in the
third quarter, compared to $15.80 bbl a year earlier and $29.60 bbl in the
second quarter.Refining and trading operations under the customers and products
segment reported an underlying replacement cost profit before interest and tax
of $6.9 billion in Q3 2026, compared to $1.7 billion in Q3 2025 and $5.0
billion in Q2 2026. Within this, the products (refining & trading) sub-segment
accounted for $5.7 billion, up from $549 million a year earlier and $3.2
billion in Q2 2026.Refining availability reached 96.5% in the third quarter,
down slightly from 96.6% in Q3 2025, but up from 94.7% in the second quarter.
Total refinery throughput was 1,396 mb/d in Q3 2026 versus 1,516 mb/d a year
ago and 1,467 mb/d in Q2 2026, reflecting the divestment of the Gelsenkirchen
refinery.BP's oil production & operations segment reported an underlying
replacement cost profit of $3.5 billion for Q3 2026, up from $2.3 billion
reported in Q3 2025 and slightly below $3.6 billion in Q2 2026.Segment
hydrocarbon production reached 1,436 mboe/d in the third quarter, down 7.8%
year-on-year from 1,556 mboe/d in Q3 2025, and flat compared to 1,436 mboe/d in
Q2 2026. Total group-wide reported upstream production stood at 2.2 mmboe/d,
flat quarter-on-quarter.
ExxonMobil USGC to Add 100,000 Bpd Distillate Yield
ExxonMobil expects its U.S. Gulf Coast refinery reconfiguration projects to
raise distillate yield by about 100,000 bpd, with the first phase underway at
Baytown, Texas, CEO Darren Woods said Friday (10/30) on the third quarter
earnings call.
Later phases are planned at Baton Rouge, Louisiana, and Beaumont, Texas, to
raise output of diesel, lubricants and chemical feedstocks, Woods said.
ExxonMobil's Gulf Coast refineries are running crude units at about 100%
utilization, a senior executive said.
Global fuels utilization, excluding Middle East disruptions, is at a record
high processing 3.6 million bpd of crude through its refineries and producing
about 1.1 million bpd of diesel so far in 2026.
Excluding Middle East disruptions, ExxonMobil's production is up from a year
earlier supported by growth in the Permian Basin and Guyana operations.
Regarding Venezuela, the company sees a future potential for its crude, but
will not invest until competitive costs, legal and fiscal terms, and investor
protections are in place.
Chevron US Refinery Throughput Hits 1M Record in Q3
Chevron's U.S. refinery crude throughput reached a record 1.093 million bpd
during the third quarter of 2026, up nearly 3% from 1.064 million bpd a year
earlier, as its refineries operated at nearly 98% of crude-processing capacity,
the company reported Friday (10/30).
U.S. refinery crude inputs also increased from 1.070 million bpd in the
second quarter, reflecting higher processing rates during the period.
Chevron's U.S. downstream earnings increased to $3.585 billion from $638
million in the third quarter of 2025, primarily driven by higher margins on
refined-product sales. Earnings also rose from $2.411 billion in the previous
quarter.
Despite higher refinery throughput, U.S. refined-product sales averaged
1.304 million bpd, virtually unchanged from 1.303 million bpd a year earlier
and down from 1.320 million bpd in the second quarter.
Internationally, Chevron's refined-product sales fell 9% to 1.388 million
bpd from 1.517 million bpd a year earlier, reflecting supply disruptions
related to the Middle East conflict. International refinery crude inputs were
little changed at 665,000 bpd, compared with 663,000 bpd in the third quarter
of 2025.
Chevron's U.S. refining network includes major Gulf Coast facilities in
Pascagoula, Mississippi, and Pasadena, Texas.
DOE Awards Over 40M Bbl in SPR Crude Exchanges
The U.S. Department of Energy (DOE) awarded contracts for the exchange of
more than 40 million bbl of crude oil from the Strategic Petroleum Reserve
(SPR), completing its planned 172-million-bbl emergency release program aimed
at increasing near-term oil supplies.
The awards, announced Thursday (10/29), are part of a coordinated release of
400 million bbl from strategic reserves held by International Energy Agency
(IEA) member countries.
The newly awarded crude will come from the SPR's Big Hill and Bryan Mound
storage sites in Texas. DOE said it will coordinate with participating
companies, pipeline operators, terminals and refiners to facilitate deliveries.
Under the broader exchange program, DOE has secured commitments to return
more than 216 million bbl to the reserve beginning in early 2027, including
approximately 44 million additional premium barrels beyond the 172 million bbl
authorized for release.
DOE Under Secretary Kyle Haustveit said the latest awards fulfill the
department's commitments under the emergency exchange program. The additional
crude expected to be returned to the reserve is valued at more than $4 billion,
according to the agency.
Big Hill and Bryan Mound are connected to Gulf Coast crude transportation
networks serving major refining centers, including Houston, Texas City and the
Beaumont-Port Arthur area. DOE did not specify the volumes awarded from each
storage site or identify refinery recipients in Thursday's announcement.
Weekly Rack Recap : Diesel Drops 23.07cts; Gas Off 4.29cts
U.S. wholesale rack prices for ultra-low sulfur diesel (ULSD) and gasoline
ended the week lower Friday (10/30), as shifting expectations surrounding the
Middle East conflict and easing refining margins weighed on fuel prices despite
a late-week recovery in energy futures.
Nationwide ULSD rack prices averaged $5.2041 gallon, down 23.07cts, or
4.25%, from the previous week's $5.4348 gallon, according to DTN data.
Conventional unleaded gasoline declined 4.29cts, or 1.28%, to $3.1369 gallon
from $3.1798 gallon.
The weekly retreat reflected a change in market sentiment after earlier
concerns over prolonged supply disruptions had driven petroleum prices sharply
higher. Renewed prospects for diplomatic engagement between Washington and
Tehran reduced some of the geopolitical risk premium, although uncertainty
surrounding Middle Eastern crude production and transportation continued to
influence trading.
The Energy Information Administration's latest inventory report presented a
mixed domestic supply picture. Gasoline inventories increased 3.9 million bbl,
adding pressure to an already weakening gasoline market, while declines of 1.5
million bbl in distillate stocks and 1.9 million bbl in commercial crude
inventories pointed to continued supply constraints.
Friday's futures market recovered some ground, with WTI crude advancing
$2.14 to $104.14 bbl and NYMEX ULSD increasing 5.68cts to $4.7928 gallon. RBOB
gasoline was at $3.1973 gallon. However, refining margins remained under
pressure, with the diesel crack at $97.24 bbl, up $0.34 on the day but below
the $100 bbl threshold breached earlier in the week. The gasoline crack
declined $1.50 to $30.25 bbl.
Diesel rack prices fell across all five PADDs, with the West Coast posting
the largest weekly decline at 26.72cts to $5.6505 gallon. East Coast ULSD
dropped 25.63cts to $4.9699 gallon, while Midwest and Gulf Coast prices
declined 22.6cts and 17.52cts, respectively.
Gasoline weakness was concentrated along the Gulf and West coasts, where
prices fell 60.2cts and 34.24cts, respectively, from the previous week's
levels. Midwest gasoline, however, increased 5.98cts to $2.9782 gallon.
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