Pulp Fiction: Heat Waves, Oil Prices, and Storage Inquiries
The plot has definitely thickened. In fact, it’s all ponco and convoluted. Heat waves can have significant effects on the energy business, impacting both the supply and demand sides of the equation. Crazy temps result in increased electricity demand and strain on power generation. Extremely hot temperatures can reduce the efficiency of solar panels and, of course, lead to price volatility in speculative markets. The oceans are getting hotter and we probably don’t want to see a Category 6 hurricane this season. The fish don’t like hot water. Have you seen the price of fish at the supermarket? You know what they put on French fries in Holland instead of ketchup? The world just experienced its hottest June on record, and July has been pretty miserable as well. Places are burning up, but everyone says keep cool. Easier said than done. The more temperatures rise, the more people hug their air conditioners. In Texas, every 1° increase in the average daily summer temperature drives a rise of about 2% in electricity demand. It’s not the heat, it’s the humidity. You might ask any Swiftie, it’s been a Cruel Summer. If my answers frighten you, then you should cease asking scary questions.
Apparently, the weather vane has changed when it comes to oil prices. Brent crude futures ended the week at $81.07 a barrel, and WTI finished the week at $77.07 a barrel, its highest level since April – gaining nearly 2% in the week. This has left the cargo short wearing paper trading short sellers wondering, “What happened to my Honda?” Pretty soon their trading managers are going to make them come back to the office, instead of “working” from home. Now what happens next is anyone’s guess, fueled by global politics and, maybe…just maybe…supply and demand. So if anyone wants to step to the line and shout “Bring on your wrecking ball!”.….go right ahead, but watch closely. Perhaps it might be better to…. You know, walk the earth, meet people… get into adventures. Like Caine from ‘Kung Fu.
Last week, The Tank Tiger feverishly fielded storage inquiries for various chemicals, asphalt, crude oil, bio feedstock, fuel oil, Veg Oil, wax, gasoline, diesel and ethanol. Yessiree Bob…we hit for the cycle. If you’d like to see the data we have gleaned over the years for all of these inquiries so that you can establish demand trends, storage pricing trends and whatever correlation coefficients that your multilinear regression ingests, just ask our resident egghead and we will provide it. Just don’t ask us about coffee…we haven’t found a place to store that yet. But we never say never. You don’t have to tell me how good my coffee is, OK? I’m the one who buys it; I know how good it is.
