Brent hits $110 a barrel, first time since May, as Houthi and Russia-Ukraine strikes drive up rack costs
Brent crude hit $110 a barrel Friday, the first time since May, up 3.7 percent on the day as Houthi strikes on Saudi Arabia and energy attacks in the Russia-Ukraine war lifted supply fears. For jobbers, that means your rack cost at pickup moved before you could blend it into street price. Branded contracts tied to a crude-linked formula reprice fast. Unbranded buyers chasing the cheapest truck are the ones who got squeezed this week.
The $110 print
A $110 Brent price works through to the rack within a day or two, and the lag is what decides whether you make or lose money moving volume this weekend.
Traders ramped up bets on higher prices into the weekend because the supply relief the market penciled in for this fall did not show. Houthi strikes put Saudi barrels in question. The Russia-Ukraine energy attacks keep hitting the infrastructure that moves crude and product out of that region. None of that is likely to ease over the weekend.
For a marketer, the move matters most if you are holding fixed-price commitments to accounts while your replacement cost climbs. Check your exposure before the holiday weekend, because the Friday close does not give you a chance to reprice until Monday morning.
NGL's terminal sale
NGL Energy Partners is selling 18 propane terminals, and the open question is whether the valuation discount on the deal is justified. For propane marketers who pull from NGL assets, new ownership can mean new contract terms and a different answer when you call about winter supply.
The discount question is the one to press. If buyers paid under book for those terminals, it tells you something about how the market values midstream propane storage right now, heading into heating season. That read-through hits any jobber negotiating a term deal off those same assets.
Watch who the buyer is and what they signal about keeping existing supply agreements in place. A new owner optimizing for return can tighten terms that NGL left loose.
What to watch
Whether the rack holds the $110 crude move or gives some back if the strait stays open and no new strikes land over the weekend. Diesel cracks could widen if the supply fears stick, so watch your distillate spread into next week.
On propane, watch for the NGL buyer's name and any statement on honoring current contracts. If allocation language changes at those 18 terminals before winter, marketers tied to them may need a backup pull lined up. Heating season is close, and term deals signed now could set the floor for January.