MARKETWIRE ALERTS

MARKETWIRE ALERTS 

MarketWire Afternoon News for October 13^th

Updated at 5:00 PM ET 

HEADLINES:

–L.A. Jet Fuel Basis Surges 20cts on El Segundo Flares

— WTI Rebounds on Tariffs, OPEC Outlook, But Stays Below $60

— Phillips 66 Carson Refinery to Flare Oct. 16 to Nov. 2

— Kansas City Fed: Q3 Central US Drilling Shrank on Weak WTI

— IATA: Fuel 40% of 2025 Carrier Costs Amid Jet Delays

— OPEC+ Output Surged 630,000 BPD in September

— OPEC: Gasoline, Jet Fuel to Dominate Global Demand in 2026

— Chevron El Segundo Flaring Follows Early October Explosion

NEWS:

L.A. Jet Fuel Basis Surges 20cts on El Segundo Flares

 Los Angeles jet fuel basis spiked on Monday (10/13) to a 35cts premium over November NYMEX RBOB futures, 20cts up from the previous trading session, driven by tight supply fundamentals as ongoing flaring at Chevron’s 269,000 bpd El Segundo refinery continues.

The price surge reverses a two-month downward trend as L.A.  jet fuel basis traded at 2.25cts over the front-month RBOB futures contract in August, before slipping to a 9ct discount by early September amid ample supply.

“The market definitely reacted to Chevron’s issues,” one trader said. 

On October 2, a massive explosion affected El Segundo refinery’s Isomax unit, which converts heavier gas oils into jet fuel and other middle distillates. The explosion also disrupted operations in other refining units and forced temporary shutdowns. Since then, Chevron has reported successive flaring events to the South Coast Air Quality Management District, while conducting internal reviews and investigations.

The explosion, however, and the subsequent refinery disruptions have upended the jet fuel price trajectory, tightening regional inventory and spurring strong bids.

 El Segundo refinery, located west of Los Angeles International Airport, has logged four flaring events since August, including two in October. The most recent flare, which began October 12 at 12:00 a.m. PT, was again declared emergency flaring, with emissions estimated above 100 lb of volatile organic compounds, per the latest South Coast AQMD filing.

WTI Rebounds on Tariffs, OPEC Outlook, But Stays Below $60

Crude prices rebounded from five-month lows on Monday (10/13) following Trump administration’s decision to dial back threats to impose massive new tariffs on China. OPEC’s decision to maintain its forecast for steady oil global demand in 2026 also contributed to the bullish sentiment.

However, oil futures gains were capped by peace prospects in the Middle East after Hamas freed 20 surviving Israeli hostages on Monday under a U.S.-brokered ceasefire deal. This could further reduce the geopolitical risk premium for oil, but caution prevails as U.S. continue increasing oil production keep supply-demand in balance.

However, today’s hike was capped on concerns that U.S producers were continuing to produce more oil than necessary to keep supply-demand in balance.

The NYMEX WTI crude futures contract for November rose $0.80 bbl to $59.70, settling the day below the $60 bbl level critical to the psychological confidence of market bulls. WTI did get to a session peak of $60.17 before slipping back.

ICE Brent for December delivery gained $0.80 to $63.53 bbl, after a session high at $63.95 versus Friday’s five-month low of $62.52. Brent’s needs to climb back above $65 to regain its bullish trajectory.

Downstream, November RBOB gasoline futures advanced $0.0291 to $1.8495 gallon, and front-month ULSD futures rose $0.0509 to $2.2553 gallon.

The U.S. dollar index strengthened, up 0.253 points to 98.985 against a basket of foreign currencies.

On Monday, OPEC’s kept unchanged its demand growth forecast at 1.4 million bpd for 2026, while raising its outlook for 2025 demand by 100,000 bpd to 1.3 million bpd.

The market reacted positively to the OPEC forecast even as it put the group at odds with forecasting agencies like the U.S. Energy Information Administration and the International Energy Agency that have turned increasingly pessimistic about oil demand growth in 2025.

So far this year, the Trump administration has levied punitive trade tariffs averaging more than 50% on Chinese imports, while China, the world’s second-largest oil crude oil importer, has responded with retaliatory tariffs averaging just over 30% on U.S. imported goods. On Sunday (10/12) though, Trump dialed back on his new tariff threats. 

Phillips 66 Carson Refinery to Flare Oct. 16 to Nov. 2

Phillips 66 notified regulators of a planned flaring event at its 139,000 bpd Los Angeles Refinery in Carson, California, expected to run from October 16 at 12:00 a.m. through November 2 at 11:59 p.m. PT, according to a filing with the South Coast Air Quality Management District.
The operator reported the event as part of start-up and shutdown activities.
Emissions during the period are estimated to exceed thresholds of 100 lb of VOC, 500 lb of SOx, and 500,000 standard cubic feet of vent gas, the filing stated.

Kansas City Fed: Q3 Central US Drilling Shrank on Weak WTI

Drilling activity in the central U.S. continued to shrink in the third quarter as crude prices traded well below levels that would encourage a substantial increase in production, the Kansas City Federal Reserve said in a survey report.

In the key Tenth District, which includes a large portion of the Permian Basin and accounts for 37% of U.S. crude output, most energy producers scaled back drilling and defered investments as the price of WTI was below levels that would incentivize output, said the report published on Friday (10/10).

“Firms reported that oil prices needed to be on average $63 per barrel for drilling to be profitable, and $78 per barrel for a substantial increase in drilling to occur,” it added.

The NYMEX WTI crude futures contract for November was at $59.86 bbl on Monday (10/13) – still below the levels cited by the Kansas City Fed.

Nearly half of the firms reported slightly delaying investment decisions due to uncertainty, while a quarter significantly delayed them, aligning with the sector-wide cautious stance.

As a result, drilling and business activity index for the district registered a negative 16 reading — down sharply from the positive 6 in the first three months of the year — as producers cut back on operations.

“We are losing money producing oil… All fixed costs have gone up, including materials, pipe, pumps, and chemicals,” a respondent to the survey said.

The lower price levels have caused revenue and profits to fall to two-year lows, the survey showed.

Another participant noted that the “tremendous uncertainty in the markets currently has a negative effect on investment decisions.”

The results align with Baker Hughes data showing the total U.S. rig count fell by two to 547 as of Friday, 39 fewer than the same week last year. Most firms do not anticipate a rebound in drilling or capital spending over the next six months, the Kansas City Fed survey showed.

IATA: Fuel 40% of 2025 Carrier Costs Amid Jet Delays

Airlines face an estimated $11 billion in extra costs this year, with nearly 40% of that coming from higher fuel expenses as carriers rely on aging planes amid aircraft delivery delays, the International Air Transport Association (IATA) said in a study issued Monday (10/13).

Excess fuel costs alone are estimated to hit $4.2 billion in 2025, IATA said in the study, attributing this to older fleets that consumed more fuel than modern jets – the result of which sent airline operational costs spiraling.

Worldwide commercial aircraft backlog hit a record of over 17,000 in 2024 — far above the typical 13,000 per year seen before 2020 – IATA stated.

“Unprecedented waits for aircraft, engines and parts and unpredictable delivery schedules … together have sent costs spiraling by at least $11 billion for this year and limited the ability of airlines to meet consumer demand,” Willie Walsh, IATA’s director-general said.

The total cost impact for 2025 is also being pushed higher by additional maintenance costs, estimated at $3.1 billion, as the entire global fleet ages and requires more frequent checks.

Increased engine leasing costs will account for $2.6 billion, as engines spend more time in maintenance and lease rates have risen by 20–30% since 2019. Further increasing the financial pressure, airlines are stocking more spare parts to guard against supply disruptions, incurring surplus inventory holding costs of $1.4 billion.

Beyond the financial crisis, the supply-demand imbalance is restricting capacity. Passenger demand grew 10.4% in 2024, outpacing the 8.7% expansion of aircraft capacity and leading to record load factors of 83.5%.

To ease the crisis, the report urges original equipment manufacturers and airlines to collaborate on strategic solutions. Walsh suggested opening the aftermarket to give airlines greater access to parts and services as one step.

OPEC+ Output Surged 630,000 BPD in September

Combined crude oil production by members of the Organization of Petroleum Exporting Countries and its partners, collectively known as OPEC+, rose by 630,000 bpd month-on-month in September, the latest monthly oil report from the group said Monday (10/13).

The increase was spearheaded by Saudi Arabia and Russia, which, respectively, pumped 248,000 bpd and 148,000 bpd more crude oil than in August, according to the October report of OPEC.

Output from OPEC+ without Libyan, Venezuelan and Iranian output, rose by 540,000 bpd month-on-month.

The bulk of the increase came from the eight member countries that since 2023 have shouldered an additional 2.2 million bpd in voluntary reductions from preset quotas, before beginning to rapidly unwind those cuts through the second and third quarters of this year.

OPEC core members Saudi Arabia, Iraq, the United Arab Emirates and Algeria, along with four partners ramped up production by a combined 572,000 bpd, despite drops in Kazakh and Mexican crude oil production. The production estimates are based on secondary sources as opposed to direct communication from member countries.

OPEC’s latest report left its 2026 global oil demand growth forecast unchanged at 1.38 million bpd and raised growth expectations for this year by 100,000 bpd to 1.30 million bpd.

Growth forecasts for supply from outside OPEC+ for this year and next were left unchanged at 800,000 bpd and 600,000 bpd, respectively.

OPEC’s demand growth estimates are significantly higher than those of agencies like the Paris-based International Energy Agency and the U.S. Energy Information Administration.

OPEC’s forecasts of non-OPEC supply growth are at the low end of analysts’ expectations, leading the group to see a small deficit in next year’s global supply-demand balance. That is at odds with other forecasters, who expect a large crude overhang in 2026.

OPEC: Gasoline, Jet Fuel to Dominate Global Demand in 2026

Gasoline is expected to contribute to nearly a third of global oil demand in 2026, closely followed by jet fuel, which dominated consumption this year, OPEC said in its monthly oil market report released Monday (10/13).

Gasoline demand is expected to grow by 430,000 bpd while uptake of jet kerosene is seen expanding by 360,000 bpd against the forecast growth of 1.4 million bpd in crude oil, according to the October report of the Organization of the Petroleum Exporting Countries.

Regionally, the Organization for Economic Co-operation and Development is forecast to grow by around 150,000 bpd year-on-year, versus the anticipated non-OECD increase of over 1.2 million bpd.

For the current year, OPEC forecasts that crude demand will grow by 1.3 million bpd year-on-year, of which jet fuel will share a growth share of 380,000 bpd, followed by diesel at 380,000 bpd and gasoline at 280,000 bpd.

OECD demand is anticipated to grow by 130,000 bpd and non-OECD by 1.2 million bpd.

“Ongoing improvements in airline activities in OECD are expected to support jet/kerosene, driving oil demand growth in 2025 by around 120,000 bpd year-on-year,” OPEC stated. “With the exception of NGLs/LPG and jet/kerosene, all other product categories in OECD have not yet managed to reach 2019 pre-pandemic levels.”

Year-to-date figures as of July showed U.S. demand for fuel products rising as of July. Natural gas liquids and liquefied petroleum gas saw the largest U.S. product increase of 477,000  bpd as of July, year-on-year, according to the report.

In the U.S., jet kerosene demand increased by 44,000 bpd. However, gasoline contracted by 168,000 bid year on-year and naphtha demand only rose slightly by 47,000 bpd.

Chevron El Segundo Flaring Follows Early October Explosion

Chevron reported another emergency flaring event at its 269,000 bpd El Segundo, California, refinery that began at 12:00 a.m. PT on October 12, according to a filing with the South Coast Air Quality Management District.
The filing indicated emissions from the flare may exceed 100 lb of volatile organic compounds (VOC) for the entire event, with daily cumulative vent gas flow estimated above 100,000 scf. The cause was listed as emergency flaring, and no stop time was available as of Sunday.
This marks the fourth reported flare at Chevron’s El Segundo facility since early August. The refinery previously reported unplanned flaring events on August 9 due to maintenance, September 7 tied to a startup/shutdown process, and October 9 for another emergency flaring incident.
Chevron’s El Segundo refinery is a major supplier of transportation fuels for Southern California markets, including Los Angeles and San Diego.

DTN data show the series of flares coincided with heightened volatility in the Los Angeles jet fuel market. On October 3, LA jet fuel differentials were assessed at 9cts below November NYMEX RBOB futures, but by October 7 had reversed to trade at 20cts above the same futures contract.
The flare incidents followed a massive explosion and fire on October 2 in the refinery’s Isomax, jet fuel unit, which knocked multiple process units offline and drew investigations into the cause.  
Market participants said the repeated flaring activity at El Segundo has “definitely impacted supply sentiment,” noting that the outages have contributed to the sharp reversal in Los Angeles jet fuel differentials in early October.

The flare incidents follow a massive explosion and fire on October 2 in the refinery’s Isomax, jet fuel unit, which knocked multiple process units offline and drew investigations into the cause.  
Market participants said the repeated flaring activity at El Segundo has “definitely impacted supply sentiment,” noting that the outages have contributed to the sharp reversal in Los Angeles jet fuel differentials in early October.