Crude hits 6-month high at $103.44 WTI as DOE taps SPR to keep Phillips 66 Lake Charles running
WTI for December settled at $103.44, up 4.46% on the week, and that cost is already working its way into the rack. Jobbers pulling loads this week are paying up fast, because wholesale moves with the benchmark on a short lag and the benchmark just posted a six-month high.
The move wasn't one bad day. WTI gained 7.81% the week before this one, so you're looking at two straight weeks of climbing feedstock with no pause to let the street catch up. Brent for December is around $116.93 after a 6.24% weekly gain, which matters for anyone whose supply prices off waterborne crude.
The Lake Charles exchange
The Department of Energy on Friday authorized an emergency exchange of up to 400,000 barrels from the Strategic Petroleum Reserve to Phillips 66's Lake Charles refinery, pulling from the West Hackberry site. DOE cited a temporary disruption to crude deliveries.
For Gulf Coast marketers this is the one to watch. A refinery short on feedstock trims runs, and trimmed runs tighten the product that feeds regional terminals. The barrels keep Lake Charles making gasoline and diesel rather than cutting rates, which holds supply at the rack steadier than it would be otherwise.
The reserve itself is at its lowest level since 1982. That's less cushion for the next disruption, and there's a decent chance of a next one given what's driving this.
Why crude is bid
Goldman's Daan Struyven says refiners are among the buyers pushing crude higher, stocking up because of escalating Houthi attacks on shipping and strikes on infrastructure. When refiners buy crude to cover themselves against a supply drop, that's demand landing on top of the supply fear, and both pull the same direction.
Struyven put a "high probability" on a sharp supply drop if the attacks keep up. For a jobber that reads as upside risk on your replacement cost, not a one-week spike you can wait out. If Gulf shipping stays disrupted, the crude you buy to refill next week could cost more than the loads you're moving now.
What to watch
Whether DOE authorizes more SPR exchanges if other Gulf refiners report delivery problems, and how fast the 400,000 barrels actually reach Lake Charles. Watch branded-versus-unbranded spreads at your terminals, because tightening supply is where majors protect their branded contract customers first and unbranded buyers feel the allocation. And watch the Houthi situation. If shipping lanes clear, crude could ease and the rack with it. If the attacks escalate, the refiner buying Struyven described may keep the benchmark bid regardless of what pump demand does.