Tag: refinery utilization

DOE Report Comments

Wow… today’s DOE report was a terrific read. I read a lot of good news from this week’s report on petroleum inventories.
As typical, let me highlight some of it:

Pros

  • Oil inventories rose by 7 million barrels, pushing them into the middle of the average range
  • Gasoline inventories rose by 3.6 million barrels, keeping them above the upper limit of the average range
  • Huge gasoline gain DESPITE much lower refinery utilization (see cons)
  • Midwest (PADD 2) inventories sit at 54.4 million barrels, their highest level since March
  • Chicago Discount could slowly work out to market as storage nears its limits

Cons

  • Refinery utilization slipped to 84.3% of capacity. This is the lowest I can remember in quite some time
  • Distillate inventories gained virtually nothing (100,000 barrels)

Overall a good report, with the Midwest PADD being in excellent condition. We can expect to see the Chicago Discount start to appear as storage facilities near their storage limits soon. This could be anywhere from 3 to 7 cents per gallon. I don’t see any reason for a hike at this time.

Prices should work down to possibly as low as the 2.70s. We’ll see!

Patrick

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DOE Report: HUGE gasoline gain, huge oil loss… I’ll take it!

With the DOE’s weekly energy report being released just moments ago, here are some highlights:

>Refinery Utilization… YES!! Finally! 91.3% of capacity. This is JUST what we needed to slow the rise in gas prices!
>Gasoline Demand… rose 0.4% compared to the same time last year, which is quite surprising… last year we had (I’m sure you remember) very “cheap” gasoline (in fact, it bottomed out UNDER $2). Demand GREW this year with prices being nearly $1.50 more per gallon? What is going on America!?
>Oil inventories… Not good… dropped by nearly 7 million barrels. We’re looking at nearly 30 million barrels less of oil than just months ago. This number is significant and MAY support $100 oil
>Gasoline inventories… GOOD! Rose by over 5 million barrels to put us in the important ABOVE AVERAGE range for the first time in months! This will help slow the rise in retail prices.
>Distillate inventories (diesel and heating oil)… Good! Rose by 1.5 million barrels to bring them to the lower half of the average range.

We had, in my mind, a good DOE report, but the bulls might initiate another round of $100 oil as we start to see the effects of a loss in oil supply from OPEC. We really need OPEC to boost production now before we run into a bigger situation when spring rolls around!

Look for oil to distance itself from gasoline today.
Oil will trade higher, gasoline should fall. We’ll see!

Patrick

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DOE Report- the good and the bad…

It’s Wednesday! I’m sure many of you know that means the Department of Energy releases its weekly petroleum report!

Lets take a peek at what this weeks report contained:

Well first, BP’s Toledo refinery came back online. This was echoed in the Midwest PADD numbers. The Midwest’s inventory of gasoline is at its largest number since the last week in June (over 49 million barrels!)

*Refiners are going backwards! Refinery utilization dropped again to 87.8%. Not sure why this dropped, but refiners should be coming OUT of maintenance, not slipping away back into it…
>We need this number to rise to over 90% very soon to dodge a huge Spring run-up in prices…

*Oil inventories dropped a whopping 7.6 million barrels.
>In the last 3 weeks, inventories have dropped over 16 million barrels. WOW. Do a conversion- thats 672 MILLION gallons of oil. HOWEVER, keep in mind that as we get closer to the end of the year, folks in the oil business are trying to draw down their stocks of oil (less tax to pay at the end of the year if you don’t have as much on hand). I’m not too worried about this huge drop, but keep this in mind- we’ve been “well above” the average range for oil the last few weeks- now all of a sudden we’re in the lower half of the average range for oil… no good.

*Gasoline stockpiles increased again… a 3 million barrel gain this week.
>In the last 2 weeks we’ve seen an increase of 7 million barrels. A nice build… we need more weeks like this where we have large builds in gasoline stocks. This news was semi-surprising because gasoline production dropped this past week. We’re now only down 1% compared to stockpiles last year. We sit on 205.2 million barrels of gasoline this week. We need this to hit 215 million barrels in a hurry to counter the Spring run up in prices.

*Distillate inventories (Diesel, heating oil) took a hit this week to the tune of 2.1 million barrels.
>Again- after being in the “above average” range for many weeks, distillate inventories have slipped into the “lower half” of the average range for this time of year. Look for diesel prices to continue their climb this winter. We’re now 8.8% lower on distillate inventories compared to last year. Thus the large increase for the fuel compared to last year. This pain will not ease anytime soon.

*Demand is essentially flat for many products
>MasterCard is reporting lower demand, while the DOE reports the smallest increase. I tend to side with the DOE. Demand is up .9 percent across the board, with a 0.3 increase in gasoline demand, a 4.3% increase in distillates, and a 1.5% decrease in jet fuel.

Bottom line: oil prices may climb today as traders digest this latest news, but they have to have bearish news on the top of their heads. Look for oil to trade higer, then come down as they realize that the all important gain in gasoline is the big deal. Today’s market will set tomorrow’s price, so stay tuned here for further updates.

I would hold off on filling up for now, I don’t believe this report is bad enough to warrant an immediate hike.

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GR/Michigan Prices start to fall under $3!

Grand Rapids prices have been falling the last few days, and as I stated on a WOODTV8 interview this evening (5pm), I think we’ll see G.R. drop below $3 Tuesday or Wednesday before the DOE Report makes a potential effect on wholesale prices.

The rest of the nation should see prices moderating a good amount as well with gasoline prices closing the distance between diesel, which has averaged far under $3/gallon.

For the locations in the nation that have seen significant price changes since May (Grand Rapids saw 66 cents), they will see the larger decreases than those that only saw slight increases in May. (New Jersey has remained below average with small hikes, so they will see smaller decreases now than Grand Rapids- that has seen a 66 cent hike since early May)

I’ll be watching for the DOE Report Wednesday to look at three MAJOR factors that will effect prices this week and next: refinery utilization, imports of finished gasoline, and gasoline stockpile gain/loss.

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DOE Report- Mixed. Build in gasoline.

Well, the DOE report was mixed.

Here are some highlights:

**Gasoline stockpiles added 1.7 million barrels, compared to the 1 million barrels analysts were predicting.

**Oil stockpiles added 1 million barrels, compared to the 400,000 expected by analysts.

**Gasoline demand is STILL up 1.0% over a year ago! DEMAND MUST DROP OR WE’RE IN TROUBLE!

**Gasoline imports averaged over 1.5 million barrels last week! (Usually around 1 million barrels- high prices are encouraging companies to send gasoline from overseas refineries)

Bad things:

**Refinery utilization was under what was expected- 89.8% was expected, and the actual number was 89.5%
**Midwest PADD storage fell to 46.6 million barrels, nearly the same as it was two weeks ago.

For the future:

BP has said it will have its Toledo, Ohio refinery back at capacity by this weekend. At this time it is in the process of being restarted (this process takes days)

Prediction: local prices should come down a bit; the $3.49 was perhaps a bit overdone. Look for $3.2X to become widespread. Wholesale prices today should fall or stay flat.

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DOE report- LOUSY.

Well, hold on a second- the DOE report just came out, and you can expect gasoline to rise today…

The DOE report was… BAD.

Refinery utilization DROPPED to 87.8% this week after continued refinery problems kept gasoline stockpiles from building. Gasoline stockpiles are now WELL BELOW their average for this time of year. They fell an unexpected 2.8 million barrels.

Oil inventories rose due to this, even though analysts expected them to fall 1.5 million barrels. They ended up rising 2.1 million barrels.

Midwest PADD storage dropped to the lowest since Katrina in 2005, sitting at 46.6 million barrels. Remember, the refinery at Whiting, Indiana is down to less than 1/2 of normal production.

Look for gasoline to possibly rise to 2.25 (wholesale) today, and with the bad DOE report, I’ll be looking for 3.05 at the pump tomorrow.

Fill up!

~Patrick

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