U.S. crude stocks took an unexpected dip last week, down 2.3 MMbbl, snapping a four-week streak of builds as refinery activity picked up. Refinery utilization climbed to 86.5%, driven by PADD 3, where gross input jumped 300 Mb/d. PADD 3 gasoline inventories fell 3 MMbbl, while distillate stocks in the region rose by the same amount. Imports inched up to 5.9 MMb/d but are still lagging behind early-year averages, while exports slipped to 4.2 MMb/d. WTI couldn’t catch a break, ending last week at $70.40/bbl—its fifth straight weekly loss and a new low for the year. Crack spreads took a beating, with gasoline cracks plunging 12.3% as fuel prices fell much harder than crude.
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- Blog
The Midwest Crack Spread Margins Really Make You Feel Alright!
Ever since US crude production began to increase in 2009 after 40 years of decline from its peak in 1970, refineries have been processing higher crude volumes. This summer (2014) crude processing volumes have been higher than at any time since the Energy Information Administration (EIA) began keeping records in 1982. Abundant supplies of reasonably priced crude in all regions as well as low refinery fuel costs are giving US refiners good reason to crank up their output. So much so that in the Midwest refinery output reached over 100 percent of capacity early in July. Today we describe the refining bonanza and how things might change in the not too distant future.
- Blog
Cracking Up, Part 2 - Will High Crack Spreads Be Enough to Balance Refined Products Markets?
U.S. diesel inventories are at their lowest level for May since 2000 and East Coast stocks recently hit their lowest mark for any week or month since the EIA started tracking them in 1990. Crack spreads for diesel — and, more recently, for gasoline — have gone parabolic, giving refiners the strongest financial signal ever to produce more diesel and gasoline as we enter the summer travel season. More jet fuel too. The problem is, U.S. refineries already are running flat-out. And Europe? It’s facing big cuts in crude oil and refined-products imports from Russia as well as much higher prices for — and possible shortages of — oil and natural gas, the latter being the primary fuel for operating refinery hydrocrackers, which upgrade low-quality heavy gas-oils into high-quality diesel, gasoline and jet. It’s a mess, and not easily fixable, as we discuss in today’s RBN blog.
- Blog
It's A Small World After All - No End in Sight for East Coast Gasoline Glut
Higher gasoline imports to the U.S. East Coast and weaker demand in the region have combined to bloat gasoline inventories, raising the question, what would it take to bring the market into balance? East Coast refinery output is down from this time last summer in response to somewhat lower crack spreads, but not enough to make a dent. Part of the problem is that while gasoline demand turned anemic in the Maine-to-Florida region, it is even weaker in many overseas markets. Also, the skill of East Coast blenders in dealing with a wide variety of supplies has always made the region an attractive destination for international product flows. Today, we continue our look at petroleum product cargo flows, and what they are telling us about the health of the market.
