Mixed Stats, But Refiners Are Smiling

By: Mike Dombroski / August 2, 2017

The oil market traded mixed after the Wednesday morning DOE reported inventory statistics from last week. Crude oil drew 1.5 million barrels, gasoline stocks drew 2.5 million barrels, and distillate drew 0.2 million barrels. While this data was in line with expectations, refinery runs increased 1.1% to 95.4% of total capacity and U.S. production increased another 20,000 barrels per day to 9.43 million barrels per day. This report initially had the market sell off, but it rallied to trade mixed as lunchtime approached. September WTI currently trades up $0.19 to $49.35/barrel.

refinery.jpg

Despite crude production being up, ULSD demand has been a prominent headline lately. OPIS reported earlier today that the U.S. exported 20.5 million barrels of distillate to South America in May. The EIA said this high amount contributed to a new record of 47 million barrels of total ULSD exports for a single month, topping the old export record of 41.9 million barrels back in October 2013. Therefore, the strong South American diesel demand is preventing a glut of the refined product here in the U.S., providing reason as to why refiners are operating at such high capacities. The current ULSD crack spread trades near $20/barrel, about a 12 month high. This is the value that a refiner makes from cracking a barrel of crude oil and turning it into diesel. The current high crack spreads coupled with the fact that the ULSD contango has shrunk to average only about a half cent premium from month to month has refiners smiling. Contango means that future prices are trading higher than the current market. This is usually a sign of a market glut; a shrinking contango means that the glut problem may be going away. These factors should encourage refiners to keep ULSD production high to meet the strong demand and capture much higher profits that they haven’t seen for awhile.

Back on the crude side of things, reports surfaced yesterday that OPEC produced 33 million barrels per day last month, a 2017 high. This production is also 90,000 barrels per day higher than the month before. This further requires a need by OPEC to meet and discuss compliance on their cut commitments. They are due to meet August 7-8 in Abu Dhabi.

September RBOB currently trades down $0.0085 to $1.6528/gallon and ULSD is higher on the day by $0.0096 to $1.6509/gallon.

market 8-1.jpg


Mike Dombroski

Written by

Mike Dombroski


Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED "AS IS," WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.


Comments

Subscribe to our blog

Price Feed

Stay up-to-date on current fuel prices and market trends with our NYMEX price feed (15 minute delay to the live market).

© 2018 Market data provided and hosted by Barchart Market Data Solutions. Fundamental company data provided by Morningstar and Zacks Investment Research. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer.

Categories

Contact Us