Where is Romeoville, Ill. and why does it matter?
Energy prices were strong last week: Sideways trading was the status quo for much of the week, but twin pipeline disruptions (natty in California and crude in Chicago) led to a pop in prices across the complex. A much better than expected increase in wholesale inventories was icing on the bulls' cake, but we will look for tomorrow’s advanced retail sales and Wednesday’s Industrial production data to indicate whether the summer of doldrums is finally behind us.
Apropos the commentary in Friday’s issue of The Schork Report , regarding the dislocation between the oil markets in New York and London, the differential between the two was cut in half after a leak forced Enbridge to shut down a key pipeline en route to the U.S Midwest (PADD II) from Canada. What’s more, the contango in the front spread on the Nymex narrowed by 40%.
The EPA has given the company until today to stop the leak. Oil futures on the Nymex surged Friday on speculation that inventories from the NYMEX delivery hub (Cushing, Okla.) will be called upon to replace the missing Canadian supplies. Cash prices for Midwest gasoline also spiked for obvious reasons.