Last week’s U.S. crude oil market was dominated by weather driven disruptions that tightened crude and distillate balances. Winter Storm Fern triggered widespread freeze offs, cutting Lower 48 weekly average production by 480 Mb/d (see graph below) and driving a 3.46 MMbbl draw in commercial crude inventories, with exports also falling due to terminal disruptions. Refinery runs declined as winter maintenance accelerated, while cold weather sharply reduced gasoline demand but boosted distillate demand, leading to a 5.55 MMbbl draw in distillate stocks, the largest since this period last year. These shifts strengthened margins, with the 3-2-1 crack rising to $24.52/bbl, led by a 20% jump in diesel cracks even as gasoline cracks weakened. Unaccounted for crude volumes swung deeply negative, likely reflecting reporting distortions tied to the scale of weather related supply and logistics disruptions.
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Refinery Utilization Hits an Eight-Year High as Product Cracks Remain Strong
As discussed in this week’s Crude Billboard, the EIA’s latest Weekly Petroleum Status Report (WPSR) shows how strong refinery demand and exports can quickly tighten U.S. crude balances, even as imports rise.
Basket Case – With U.S. Refiners Already Running Hard, Relief on Diesel Remains Elusive
Today, we look at why high crack spreads don’t necessarily increase a refinery’s output, how market disruptions elsewhere can drain U.S. inventories, and the indicators that will help tell us whether the diesel squeeze is easing (or worsening).
Leap of Faith – Potential Plans to Limit U.S. Diesel Exports Come With Plenty of Downside Risk
A series of disruptions to global refining capacity and refined-product flows has raised the prospect of a ban on U.S. diesel exports as a way to keep prices in check. Today, we look at where things stand and how a U.S. export ban could result in a number of major unintended and negative consequences.
