Motiva

More than a decade ago, several U.S. refiners brought new hydrocracking capacity online, wagering that rising demand for middle distillates made such major investments necessary. They were good bets. Demand for jet fuel is expected to continue to grow, and while diesel demand is seen as relatively flat in the U.S. over the next few years, it will continue to climb globally through 2045, according to RBN’s recently released Future of Fuels report. In contrast, the report also sees domestic gasoline demand declines accelerating post-2026 and peaking globally by about 2030, as more consumers turn to electric vehicles (EVs). These contrasting trajectories for middle distillates vs. gasoline will put a growing premium on distillate-centric hydrocracking capacity. In today’s RBN blog, we’ll examine trends incentivizing hydrocracking capacity and how these units will allow U.S. refiners to maintain their competitiveness in a rapidly changing product market. 

There is a story behind every new crude oil pipeline built to supply a decades-old refinery. After all, the refinery surely had a well-established crude-delivery system in place –– why change horses now, especially with refinery margins under so much pressure? Typically, the answer is that, well, times have changed. Or, more specifically, the Shale Revolution has up-ended traditional crude sourcing, forced refinery owners to rethink their crude slates, and opened up opportunities to access new, lower-cost oil. Today, we continue our look at these new pipeline connections, their rationales, and their effects on other pipelines, barge deliveries and crude-by-rail.

Crude oil prices are in free fall – the prompt U.S. benchmark WTI CME NYMEX futures contract was down 24 percent to $81.78/Bbl yesterday (October 15, 2014) from its recent high in June. International benchmark IPE Brent futures were down 27 % over the same period to $83.78/Bbl. Most analysts point to an excess of crude supply over faltering demand as the main driver behind the price collapse. The apparent willingness of OPEC leader Saudi Arabia to protect its market share at the expense of higher prices is also a bearish factor. Today we explain why Saudi Arabia is bucking the trend that has pushed out other light crude imports with a robust and unwavering flow of 330 Mb/d of Arab Light.