Wednesday, January 16, 2013

Crude OIl, Gasoline -- January 16, 2013 -- Idle Chatter -- No Real Cohesiveness

Some disjointed thoughts and comments. This post may not be ready for prime-time. May be amended later tonight. Being put together "on the run."

PSX up over $2.00 today.

Some data points from today's energy reports from the US government:
  • nation's crude oil supplies decreased, but supplies at Cushing rose; supplies fell by one million bbls; analysts expected a build of 2.5 million bbls
  • gasoline supplies grew by almost 2 million barrels; analysts expected a rise of 3 million bbls
  • four-week average for gasoline demand: slightly less than a year earlier
  • refineries: 88% utilization; analysts expected the rate to fall to 89%
  • distillates, which includes diesel fuel and heating oil, rose slightly more than expected
  • benchmark crude oil rises about 50 cents/gallon
Now, the PSX story:
  • refinery fire at a PSX refinery, took the refinery off-line; refinery should be back up and running soon (if not already back on-line) -- so, forget about the fire; this is the real nugget -- PSX is refining WCS oil; WCS oil is discounted almost $40 to WTI; gasoline is pretty much the same price in any given city, regardless of the source of the oil; no wonder PSX is up today
I cannot sort out why crude oil supplies decreased -- sure, winter shut down some fracking in the Bakken, and Canadians might be cutting back, but supplies actually increased at Cushing. I would call it a "wash" except a 3.5 million-bbl delta seems fairly significant.

Oil cannot be exported, but refined products can be exported. Is it possible that more refined products are being exported? 

Meanwhile, the supply of gasoline creeps up; demand for gasoline slightly less than a year earlier.

So, the price of oil creeps up today (futures) and gasoline in my neighborhood staying the same. It's been that way for several weeks now. At some point gasoline needs to increase in price if oil keeps going up. But a) gasoline demand destruction; and b), price of WCS keeping downward pressure on price of gasoline.

Another comment: what might this mean, "Meanwhile, the supply of gasoline creeps up; demand for gasoline slightly less than a year earlier."?

A couple of thoughts:
  • if the economy of the US was indeed improving as I'm hearing from talking heads, wouldn't demand for gasoline be increasing? And home construction, etc., all those trucks -- distillates rose more than expected. The supply of heating oil rising should not be surprising: it's been another incredibly mild winter in the northeast where they still use a lot of heating oil. So, does less demand for gasoline portend a less robust economy going forward....
  • it appears maybe the refiners are noting the same demand destruction; refinery utilization dropped slightly more than expected....

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