Petroleum Watch - March 2012 amazonaws com
PETROLEUM WATCH Transportation Energy Office Fuels and Transportation Division California Energy Commission
March 20, 2012
Summary As of March 19, retail regular-grade gasoline prices in California increased 54 cents to $4.38 per gallon since the previous Petroleum Watch, while retail diesel prices rose by 27 cents to $4.48 per gallon. California retail prices rose due to a variety of factors, including increases in crude oil prices, refinery outages, and the transition to summer blend gasoline in Southern California. Diesel price increases continue to be relatively restrained by weakness in the trucking industry and a mild winter leading to lower heating oil demand. California spot wholesale gasoline prices increased 26 cents from a month ago to $3.09 per gallon, a 9 percent gain. Higher crude oil prices and unplanned refinery outages both pushed wholesale gasoline prices up. Wholesale diesel prices rose 4 cents to $3.20. Refinery production of California-compliant gasoline in California rose 3.1 percent and inventories grew by 1.4 percent in the past week. However, diesel production fell 25.3 percent and diesel inventories fell 4.8 percent from last week. Non-California compliant diesel (which includes EPA and high sulfur diesel) production increased 190 percent, suggesting greater diesel exports out of California. An increase in world crude oil prices contributed to fuel price changes over the past month. Brent oil prices have risen to $128.14 per barrel while West Texas Intermediate (WTI) prices have risen to $106.70 per barrel. As of March 13, Alaska North Slope (ANS) crude oil prices rose to $122.81, $5.90 more than a month ago. Comparisons of Diesel, Gasoline, and Crude Oil Price Changes In January and early February 2012, gasoline and diesel prices increased relatively slowly. These increases accelerated in late February 2012 before leveling off in March. As of March 19, ANS prices reached $2.95 per gallon, gasoline prices were $4.38 per gallon, and diesel prices were $4.48 per gallon. Gasoline, ANS, and diesel prices rose 67 cents, 37 cents, and 31 cents per gallon higher, respectively, from January 9, 2012. Rising crude oil prices pushed both gasoline and diesel prices up; however, gasoline prices increased more than diesel due to refinery outages and the transition from winter to summer blend gasoline.
1
Retail Prices The average California retail price for regular-grade gasoline increased 54 cents over the past month, rising to $4.38 per gallon, and is 41 cents higher than this time last year. 1 Average U.S. retail gasoline prices have also increased, rising 35 cents from a month ago to $3.87. Average U.S. gasoline prices are 31 cents more than a year ago. The difference between California and U.S. retail gasoline prices increased to 51 cents, well above the 2009-2011 average of 31 cents per gallon. Wholesale prices are now below the late February–early March highs, while retail prices have not yet fallen. California prices increased more than national prices because of a fire at the BP Cherry Point refinery in Washington state and other refinery outages in California. Regular‐Grade Gasoline Retail Prices State Average vs. National Average 5.00
4.00 3.50 3.00
California U.S.
2.50
2
1‐Mar‐12
1‐Jan‐12
1‐Nov‐11
1‐Sep‐11
1‐Jul‐11
1‐May‐11
1‐Mar‐11
1‐Jan‐11
1‐Nov‐10
1‐Sep‐10
1‐Jul‐10
1‐May‐10
1‐Mar‐10
2.00
1‐Jan‐10
Dollars per Gallon
4.50
Gasoline prices continue to remain at record highs for this time of year, 30 to 55 cents above last year’s seasonal highs. The overall 2011 high of $4.26 has already been surpassed. The highest retail price seen in California, $4.59 in June 2008, is only 21 cents above the most recent California retail price. Weekly California Retail Gasoline Prices 5.00 4.50
Dollars per Gallon
4.00 3.50 3.00 2.50 2.00
2007
2008
2009
2010
2011
1-Dec
1-Nov
1-Oct
1-Sep
1-Aug
1-Jul
1-Jun
1-May
1-Apr
1-Mar
1-Feb
1-Jan
1.50
2012
The average California retail diesel price increased 27 cents over the past month to $4.48 per gallon. The average U.S. retail diesel price rose 20 cents over the past month, to $4.14 per gallon. As a result, the premium for California diesel over U.S. diesel prices increased 7 cents to 34 cents over the past month. California diesel prices are 28 cents higher than a year ago, and U.S. prices are 24 cents higher. Like gasoline, California retail diesel prices have followed the increase in wholesale spot prices, and have not yet started to move down. Diesel prices continue to be less volatile than gasoline prices since the highs of May 2011.
3
Diesel Retail Prices State Average vs. National Average 5.00
Dollars per Gallon
4.50 4.00 3.50 3.00
California
2.50
U.S. 1‐Mar‐12
1‐Jan‐12
1‐Nov‐11
1‐Sep‐11
1‐Jul‐11
1‐May‐11
1‐Mar‐11
1‐Jan‐11
1‐Nov‐10
1‐Sep‐10
1‐Jul‐10
1‐May‐10
1‐Mar‐10
1‐Jan‐10
2.00
Wholesale Gasoline and Blendstock Prices on March 13 California spot wholesale gasoline prices for regular-grade reformulated blendstock for oxygenate blending (RBOB) rose to $3.47 per gallon, 42 cents higher than a month ago and a 28 cent increase over the same time a year ago. Prices in New York saw a similar trend, rising 38 cents over the past month with a 48-cent gain over a year ago. This increase follows the upward trend in crude oil prices. The surge in California wholesale gasoline price from February 14 to 28 is the sharpest two week increase since Hurricane Katrina, both in absolute and percentage terms. This increase resulted from a number of factors. •
•
•
The annual transition from winter to summer blends in California typically causes a seasonal spike in gasoline prices in February. Refiners must convert to the more expensive summer blend before the summer transition, which takes place in March in Southern California and later in other regions. Since summer blend gasoline is more expensive to produce than winter blend, there is typically a corresponding rise in the wholesale gasoline price in February as summer blend production ramps up. While the price of crude oil had been increasing in December and January, the price of wholesale gasoline during this time remained relatively flat. This put significant pressure on refining margins, and the wholesale price rise could be interpreted as a correction to this imbalance. A fire at BP's 225,000 barrel-per-day refinery in Cherry Point, Washington on February 17 caused a significant increase in prices as the refinery was forced to cover its wholesale gasoline contracts in the Pacific Northwest by buying wholesale gasoline from elsewhere. A public notice published by the refinery stated that its production will be halted through at least April.
4
•
February typically sees a number of refineries in California undergo planned maintenance, and this year has been no exception. The corresponding crimp in gasoline supply further exacerbated the seasonal increase.
California average spot wholesale ultra-low-sulfur diesel prices stood at $3.46, an increase of 7 cents in the past week and up 26 cents from a month ago. The average representative estimated cost of fuel ethanol to California refiners and marketers rose 18 cents to $2.42 per gallon as of March 13, 2012. 2 Ethanol prices gradually increased in response to corn and wholesale gasoline price increases. The January 2012 jump in ethanol price was primarily the result of the 45 cent-per-gallon excise tax credit expiring at the end of 2011.
The Energy Information Administration’s (EIA) weekly report for the week ending March 9 shows that U.S. gasoline consumption edged up 1.9 percent while distillate consumption rose 8.1 percent from the previous week. However, the four-week average consumption for gasoline is 8.4 million barrels per day, a decrease of 7.2 percent from the four-week average the same time a year ago. The four-week average for U.S. distillate consumption is 3.6 million barrels per day, 7.1 percent less than the same period a year ago. High gasoline prices have been a key factor in suppressing gasoline demand. Meanwhile, the mild winter in the United States continues to depress heating oil (and hence distillate) demand.
5
6
Futures-Spot Market Spread 3 As of March 13, the spot market price for California gasoline shows a 15 cent premium to the NYMEX one-month-ahead futures price, using five-day moving averages. Unplanned refinery outages caused a spike in late February: this differential reached 52 cents per gallon on February 27, the greatest since October 14, 2008. This premium rapidly diminished as refineries resumed operations. The past month has seen the greatest volatility of the spread since summer 2011. CARBOB ‐ NYMEX Differential Cents per Gallon, 5‐Day Moving Average
50
40
30
20
10
0
‐10
‐20
7
01‐Mar‐12
01‐Feb‐12
01‐Jan‐12
01‐Dec‐11
01‐Nov‐11
01‐Oct‐11
01‐Sep‐11
01‐Aug‐11
01‐Jul‐11
01‐Jun‐11
01‐May‐11
01‐Apr‐11
01‐Mar‐11
01‐Feb‐11
01‐Jan‐11
01‐Dec‐10
‐30
01‐Nov‐10
CARBOB Spot Price Less NYMEX Month‐Ahead Price
60
California diesel sells at a premium of 18 cents to the NYMEX heating oil one-month ahead futures price, well above the level seen in the February Petroleum Watch, and above the average 12 cent premium. California diesel prices and NYMEX one-month ahead prices tracked each other closely until the final week of February, when the California diesel rose while NYMEX heating oil fell. This differential reached 19 cents on March 6, the greatest since November 3, 2011. The premium for California diesel has returned in response to the weak heating oil market due to the warm weather and low resulting demand for heating oil in the Northeast. The CeridianUCLA Pulse of Commerce Index indicates that trucking activity has been weak throughout the United States and that California has been close to the national average, with a correspondingly low demand for diesel.
Diesel ‐ NYMEX Heating Oil Differential
40
30
20
10
0
‐10
‐20
8
01‐Mar‐12
01‐Feb‐12
01‐Jan‐12
01‐Dec‐11
01‐Nov‐11
01‐Oct‐11
01‐Sep‐11
01‐Aug‐11
01‐Jul‐11
01‐Jun‐11
01‐May‐11
01‐Apr‐11
01‐Mar‐11
01‐Feb‐11
01‐Jan‐11
01‐Dec‐10
‐30
01‐Nov‐10
California Diesel Spot Price Less NYMEX Month‐Ahead Price
Cents per Gallon, 5‐Day Moving Average 50
Refinery Production and Inventories Reformulated gasoline production in California for the week ending March 9 increased 3.1 percent from the previous week to 6.5 million barrels, rising to the top of the five-year range. Recently, California refineries have been coming back online after planned and unplanned maintenance which has helped increase reformulated gasoline production. 4
California reformulated gasoline inventories decreased 2.7 percent from the past week, while gasoline blendstock inventories increased 4.8 percent. California’s combined inventories of reformulated gasoline and gasoline blendstocks increased 1.4 percent to 13.4 million barrels, rising to the middle of the five-year range.
9
For the United States, gasoline inventories as of March 9 decreased to 228.1 million barrels, 1.4 million barrels less than the previous week. Inventories increased by 639,000 barrels on the East Coast, but decreased by 787,000 barrels on the Gulf Coast, and by 113,000 barrels on the West Coast. California-compliant ultra-low-sulfur diesel fuel (CARB diesel) production 5 was 1.2 million barrels during the week ending on March 9, a decrease of 25.3 percent from the previous week, falling well below the five-year range. Production of EPA diesel, which is primarily for export from California, increased 190 percent. Production of both CARB diesel and EPA diesel together increased by 11 percent from the previous week.
Inventories of CARB diesel in California decreased 4.8 percent from the previous week to 2.4 million barrels, falling to the bottom of the five-year range.
10
U.S. distillate inventories as of March 9 fell to 134.8 million barrels, 4.7 million barrels less than the previous week. Inventories decreased by 1.7 million barrels on the East Coast, 1.9 million barrels on the Gulf Coast, and 536,000 barrels on the West Coast. . Crude Oil Prices and Associated Factors West Coast prices for ANS crude oil, a refinery feedstock for California, rose to $122.81 as of March 13. Prices have risen $5.90 since the previous Petroleum Watch and are $9.27 higher than a year ago. 6 ANS crude oil price changes are influenced by inventory levels, refinery capacity, domestic and international economic conditions, currency exchange rates, perceived risks to global supply such as unrest in the Middle East, and near-term price trends as indicated by the futures market for crude oil. Scheduled sanctions against Iran have had the effect of increasing geopolitical tensions and reducing anticipated exports of Iranian oil to Asian and European countries, pushing prices up. Discussions of an expanded bailout to Greece have also increased economic optimism, putting upward pressure on prices. The dollar has strengthened somewhat over the past month and inventories have increased, restraining price increases.
11
Recent Trends in Crude Oil Prices February 2012
March 2012
Change from previous Month
$116.91
$122.81
Up 5.0 %
$116.86
$128.14
Up 9.7%
$98.55
$106.70
Up 8.3%
U.S. Crude Oil Inventories (MM Barrels)
339.2
347.5
Up 2.4 %
S&P 500
1,347
1,396
Up 3.6%
EURO STOXX 50 Price
2,497 78.6
2,527 80.2
Up 1.2 % Up 2.0 %
ANS Crude Oil Price (U.S. Dollars/Barrel) Europe Brent Crude Oil Price (U.S. Dollars/Barrel) West Texes Intermediate, Cushing Oil Price (U.S. Dollars/Barrel)
Total Dollar Index
Directional Contributing Factor Upward
Downward
Unchanged
European Debt Problems Disruption in Oil Exports
The spread between West Texas Intermediate crude oil prices and the Brent crude oil contracts remains wide, averaging $17.91 since the last Petroleum Watch. Factors responsible for this divergence include a 19 percent increase in crude oil inventories in Cushing, Oklahoma since the last Petroleum Watch report. West Texas Intermediate-NYMEX futures traded at $106.70 per barrel as of March 13, $16.11 less than ANS crude oil. Since March 2, Brent prices have risen to $5.33 above ANS prices in response to the strengthening of the dollar relative to the Euro.
A major reason for the divergence between Brent and WTI crude oil prices earlier this year was the increased production of shale oil from the Bakken formation in North Dakota. A combination of increased rail transportation 7 , barge shipments, and planned pipeline reversals has eased transportation problems. Nevertheless, North Dakota oil production is increasing more quickly than oil transportation infrastructure in that region, which has again led to increased inventories and lower WTI prices relative to Brent. U.S. crude oil inventories have increased over the past week. As of March 9, U.S. commercial crude oil inventories rose by 1.8 million barrels from the previous week to 347.5 million barrels. Crude oil stocks are 3.2 million barrels less than a year ago but 10.9 million barrels more than
12
the five-year average for this date. California crude oil stocks rose 4.8 percent from the previous week to 16.7 million barrels and are 16.1 percent more than a year ago.
1
Retail gasoline and diesel prices and U.S. crude oil and product inventory estimates are from the Energy Information Administration of the U.S. Department of Energy. 2 Ethanol railcar prices are from Platts Oilgram and are average prices for prompt Southern California shipments minus a 45¢/gal federal excise tax credit for 2009 through 2011 prices and a 51¢/gal federal excise tax credit for prices prior to 2009. The federal excise tax credit expired at the end of 2011. California alkylate prices are also calculated from Platts Oilgram and include a 20¢/gal transportation and distribution cost from Gulf Coast to California. Spot wholesale prices for regular-grade California reformulated gasoline blendstock for oxygenate blending (CARBOB) are from Oil Price Information Service. 3 A higher spread between the state’s spot fuel prices and the New York Mercantile Exchange (NYMEX) futures price indicates supplies are tighter in California, and a lower spread indicates the market is relatively well-supplied compared to the rest of the country. The NYMEX futures price reflects the national market, while California Reformulated Gasoline Blendstock for Oxygenate Blending (CARBOB) is a gasoline blend unique to California and is usually sold at a premium to the NYMEX price. 4 California refinery production and inventory information is from the Petroleum Industry Information Reporting Act (PIIRA) database maintained by the California Energy Commission. 5 Staff has discontinued the reporting of combined CARB and EPA diesel production and inventories and will report only CARB diesel as of December 2009. EPA diesel is primarily for export from California. 6 Alaska North Slope (ANS) crude oil prices are from The Wall Street Journal. Brent and West Texas Intermediate (WTI) crude oil prices are from the Energy Information Administration. 7 Oil Rail transportation estimates are obtained from the Energy Information Administration of the U.S. Department of Energy and the American Association of Railroads
13
March 20, 2012
Summary As of March 19, retail regular-grade gasoline prices in California increased 54 cents to $4.38 per gallon since the previous Petroleum Watch, while retail diesel prices rose by 27 cents to $4.48 per gallon. California retail prices rose due to a variety of factors, including increases in crude oil prices, refinery outages, and the transition to summer blend gasoline in Southern California. Diesel price increases continue to be relatively restrained by weakness in the trucking industry and a mild winter leading to lower heating oil demand. California spot wholesale gasoline prices increased 26 cents from a month ago to $3.09 per gallon, a 9 percent gain. Higher crude oil prices and unplanned refinery outages both pushed wholesale gasoline prices up. Wholesale diesel prices rose 4 cents to $3.20. Refinery production of California-compliant gasoline in California rose 3.1 percent and inventories grew by 1.4 percent in the past week. However, diesel production fell 25.3 percent and diesel inventories fell 4.8 percent from last week. Non-California compliant diesel (which includes EPA and high sulfur diesel) production increased 190 percent, suggesting greater diesel exports out of California. An increase in world crude oil prices contributed to fuel price changes over the past month. Brent oil prices have risen to $128.14 per barrel while West Texas Intermediate (WTI) prices have risen to $106.70 per barrel. As of March 13, Alaska North Slope (ANS) crude oil prices rose to $122.81, $5.90 more than a month ago. Comparisons of Diesel, Gasoline, and Crude Oil Price Changes In January and early February 2012, gasoline and diesel prices increased relatively slowly. These increases accelerated in late February 2012 before leveling off in March. As of March 19, ANS prices reached $2.95 per gallon, gasoline prices were $4.38 per gallon, and diesel prices were $4.48 per gallon. Gasoline, ANS, and diesel prices rose 67 cents, 37 cents, and 31 cents per gallon higher, respectively, from January 9, 2012. Rising crude oil prices pushed both gasoline and diesel prices up; however, gasoline prices increased more than diesel due to refinery outages and the transition from winter to summer blend gasoline.
1
Retail Prices The average California retail price for regular-grade gasoline increased 54 cents over the past month, rising to $4.38 per gallon, and is 41 cents higher than this time last year. 1 Average U.S. retail gasoline prices have also increased, rising 35 cents from a month ago to $3.87. Average U.S. gasoline prices are 31 cents more than a year ago. The difference between California and U.S. retail gasoline prices increased to 51 cents, well above the 2009-2011 average of 31 cents per gallon. Wholesale prices are now below the late February–early March highs, while retail prices have not yet fallen. California prices increased more than national prices because of a fire at the BP Cherry Point refinery in Washington state and other refinery outages in California. Regular‐Grade Gasoline Retail Prices State Average vs. National Average 5.00
4.00 3.50 3.00
California U.S.
2.50
2
1‐Mar‐12
1‐Jan‐12
1‐Nov‐11
1‐Sep‐11
1‐Jul‐11
1‐May‐11
1‐Mar‐11
1‐Jan‐11
1‐Nov‐10
1‐Sep‐10
1‐Jul‐10
1‐May‐10
1‐Mar‐10
2.00
1‐Jan‐10
Dollars per Gallon
4.50
Gasoline prices continue to remain at record highs for this time of year, 30 to 55 cents above last year’s seasonal highs. The overall 2011 high of $4.26 has already been surpassed. The highest retail price seen in California, $4.59 in June 2008, is only 21 cents above the most recent California retail price. Weekly California Retail Gasoline Prices 5.00 4.50
Dollars per Gallon
4.00 3.50 3.00 2.50 2.00
2007
2008
2009
2010
2011
1-Dec
1-Nov
1-Oct
1-Sep
1-Aug
1-Jul
1-Jun
1-May
1-Apr
1-Mar
1-Feb
1-Jan
1.50
2012
The average California retail diesel price increased 27 cents over the past month to $4.48 per gallon. The average U.S. retail diesel price rose 20 cents over the past month, to $4.14 per gallon. As a result, the premium for California diesel over U.S. diesel prices increased 7 cents to 34 cents over the past month. California diesel prices are 28 cents higher than a year ago, and U.S. prices are 24 cents higher. Like gasoline, California retail diesel prices have followed the increase in wholesale spot prices, and have not yet started to move down. Diesel prices continue to be less volatile than gasoline prices since the highs of May 2011.
3
Diesel Retail Prices State Average vs. National Average 5.00
Dollars per Gallon
4.50 4.00 3.50 3.00
California
2.50
U.S. 1‐Mar‐12
1‐Jan‐12
1‐Nov‐11
1‐Sep‐11
1‐Jul‐11
1‐May‐11
1‐Mar‐11
1‐Jan‐11
1‐Nov‐10
1‐Sep‐10
1‐Jul‐10
1‐May‐10
1‐Mar‐10
1‐Jan‐10
2.00
Wholesale Gasoline and Blendstock Prices on March 13 California spot wholesale gasoline prices for regular-grade reformulated blendstock for oxygenate blending (RBOB) rose to $3.47 per gallon, 42 cents higher than a month ago and a 28 cent increase over the same time a year ago. Prices in New York saw a similar trend, rising 38 cents over the past month with a 48-cent gain over a year ago. This increase follows the upward trend in crude oil prices. The surge in California wholesale gasoline price from February 14 to 28 is the sharpest two week increase since Hurricane Katrina, both in absolute and percentage terms. This increase resulted from a number of factors. •
•
•
The annual transition from winter to summer blends in California typically causes a seasonal spike in gasoline prices in February. Refiners must convert to the more expensive summer blend before the summer transition, which takes place in March in Southern California and later in other regions. Since summer blend gasoline is more expensive to produce than winter blend, there is typically a corresponding rise in the wholesale gasoline price in February as summer blend production ramps up. While the price of crude oil had been increasing in December and January, the price of wholesale gasoline during this time remained relatively flat. This put significant pressure on refining margins, and the wholesale price rise could be interpreted as a correction to this imbalance. A fire at BP's 225,000 barrel-per-day refinery in Cherry Point, Washington on February 17 caused a significant increase in prices as the refinery was forced to cover its wholesale gasoline contracts in the Pacific Northwest by buying wholesale gasoline from elsewhere. A public notice published by the refinery stated that its production will be halted through at least April.
4
•
February typically sees a number of refineries in California undergo planned maintenance, and this year has been no exception. The corresponding crimp in gasoline supply further exacerbated the seasonal increase.
California average spot wholesale ultra-low-sulfur diesel prices stood at $3.46, an increase of 7 cents in the past week and up 26 cents from a month ago. The average representative estimated cost of fuel ethanol to California refiners and marketers rose 18 cents to $2.42 per gallon as of March 13, 2012. 2 Ethanol prices gradually increased in response to corn and wholesale gasoline price increases. The January 2012 jump in ethanol price was primarily the result of the 45 cent-per-gallon excise tax credit expiring at the end of 2011.
The Energy Information Administration’s (EIA) weekly report for the week ending March 9 shows that U.S. gasoline consumption edged up 1.9 percent while distillate consumption rose 8.1 percent from the previous week. However, the four-week average consumption for gasoline is 8.4 million barrels per day, a decrease of 7.2 percent from the four-week average the same time a year ago. The four-week average for U.S. distillate consumption is 3.6 million barrels per day, 7.1 percent less than the same period a year ago. High gasoline prices have been a key factor in suppressing gasoline demand. Meanwhile, the mild winter in the United States continues to depress heating oil (and hence distillate) demand.
5
6
Futures-Spot Market Spread 3 As of March 13, the spot market price for California gasoline shows a 15 cent premium to the NYMEX one-month-ahead futures price, using five-day moving averages. Unplanned refinery outages caused a spike in late February: this differential reached 52 cents per gallon on February 27, the greatest since October 14, 2008. This premium rapidly diminished as refineries resumed operations. The past month has seen the greatest volatility of the spread since summer 2011. CARBOB ‐ NYMEX Differential Cents per Gallon, 5‐Day Moving Average
50
40
30
20
10
0
‐10
‐20
7
01‐Mar‐12
01‐Feb‐12
01‐Jan‐12
01‐Dec‐11
01‐Nov‐11
01‐Oct‐11
01‐Sep‐11
01‐Aug‐11
01‐Jul‐11
01‐Jun‐11
01‐May‐11
01‐Apr‐11
01‐Mar‐11
01‐Feb‐11
01‐Jan‐11
01‐Dec‐10
‐30
01‐Nov‐10
CARBOB Spot Price Less NYMEX Month‐Ahead Price
60
California diesel sells at a premium of 18 cents to the NYMEX heating oil one-month ahead futures price, well above the level seen in the February Petroleum Watch, and above the average 12 cent premium. California diesel prices and NYMEX one-month ahead prices tracked each other closely until the final week of February, when the California diesel rose while NYMEX heating oil fell. This differential reached 19 cents on March 6, the greatest since November 3, 2011. The premium for California diesel has returned in response to the weak heating oil market due to the warm weather and low resulting demand for heating oil in the Northeast. The CeridianUCLA Pulse of Commerce Index indicates that trucking activity has been weak throughout the United States and that California has been close to the national average, with a correspondingly low demand for diesel.
Diesel ‐ NYMEX Heating Oil Differential
40
30
20
10
0
‐10
‐20
8
01‐Mar‐12
01‐Feb‐12
01‐Jan‐12
01‐Dec‐11
01‐Nov‐11
01‐Oct‐11
01‐Sep‐11
01‐Aug‐11
01‐Jul‐11
01‐Jun‐11
01‐May‐11
01‐Apr‐11
01‐Mar‐11
01‐Feb‐11
01‐Jan‐11
01‐Dec‐10
‐30
01‐Nov‐10
California Diesel Spot Price Less NYMEX Month‐Ahead Price
Cents per Gallon, 5‐Day Moving Average 50
Refinery Production and Inventories Reformulated gasoline production in California for the week ending March 9 increased 3.1 percent from the previous week to 6.5 million barrels, rising to the top of the five-year range. Recently, California refineries have been coming back online after planned and unplanned maintenance which has helped increase reformulated gasoline production. 4
California reformulated gasoline inventories decreased 2.7 percent from the past week, while gasoline blendstock inventories increased 4.8 percent. California’s combined inventories of reformulated gasoline and gasoline blendstocks increased 1.4 percent to 13.4 million barrels, rising to the middle of the five-year range.
9
For the United States, gasoline inventories as of March 9 decreased to 228.1 million barrels, 1.4 million barrels less than the previous week. Inventories increased by 639,000 barrels on the East Coast, but decreased by 787,000 barrels on the Gulf Coast, and by 113,000 barrels on the West Coast. California-compliant ultra-low-sulfur diesel fuel (CARB diesel) production 5 was 1.2 million barrels during the week ending on March 9, a decrease of 25.3 percent from the previous week, falling well below the five-year range. Production of EPA diesel, which is primarily for export from California, increased 190 percent. Production of both CARB diesel and EPA diesel together increased by 11 percent from the previous week.
Inventories of CARB diesel in California decreased 4.8 percent from the previous week to 2.4 million barrels, falling to the bottom of the five-year range.
10
U.S. distillate inventories as of March 9 fell to 134.8 million barrels, 4.7 million barrels less than the previous week. Inventories decreased by 1.7 million barrels on the East Coast, 1.9 million barrels on the Gulf Coast, and 536,000 barrels on the West Coast. . Crude Oil Prices and Associated Factors West Coast prices for ANS crude oil, a refinery feedstock for California, rose to $122.81 as of March 13. Prices have risen $5.90 since the previous Petroleum Watch and are $9.27 higher than a year ago. 6 ANS crude oil price changes are influenced by inventory levels, refinery capacity, domestic and international economic conditions, currency exchange rates, perceived risks to global supply such as unrest in the Middle East, and near-term price trends as indicated by the futures market for crude oil. Scheduled sanctions against Iran have had the effect of increasing geopolitical tensions and reducing anticipated exports of Iranian oil to Asian and European countries, pushing prices up. Discussions of an expanded bailout to Greece have also increased economic optimism, putting upward pressure on prices. The dollar has strengthened somewhat over the past month and inventories have increased, restraining price increases.
11
Recent Trends in Crude Oil Prices February 2012
March 2012
Change from previous Month
$116.91
$122.81
Up 5.0 %
$116.86
$128.14
Up 9.7%
$98.55
$106.70
Up 8.3%
U.S. Crude Oil Inventories (MM Barrels)
339.2
347.5
Up 2.4 %
S&P 500
1,347
1,396
Up 3.6%
EURO STOXX 50 Price
2,497 78.6
2,527 80.2
Up 1.2 % Up 2.0 %
ANS Crude Oil Price (U.S. Dollars/Barrel) Europe Brent Crude Oil Price (U.S. Dollars/Barrel) West Texes Intermediate, Cushing Oil Price (U.S. Dollars/Barrel)
Total Dollar Index
Directional Contributing Factor Upward
Downward
Unchanged
European Debt Problems Disruption in Oil Exports
The spread between West Texas Intermediate crude oil prices and the Brent crude oil contracts remains wide, averaging $17.91 since the last Petroleum Watch. Factors responsible for this divergence include a 19 percent increase in crude oil inventories in Cushing, Oklahoma since the last Petroleum Watch report. West Texas Intermediate-NYMEX futures traded at $106.70 per barrel as of March 13, $16.11 less than ANS crude oil. Since March 2, Brent prices have risen to $5.33 above ANS prices in response to the strengthening of the dollar relative to the Euro.
A major reason for the divergence between Brent and WTI crude oil prices earlier this year was the increased production of shale oil from the Bakken formation in North Dakota. A combination of increased rail transportation 7 , barge shipments, and planned pipeline reversals has eased transportation problems. Nevertheless, North Dakota oil production is increasing more quickly than oil transportation infrastructure in that region, which has again led to increased inventories and lower WTI prices relative to Brent. U.S. crude oil inventories have increased over the past week. As of March 9, U.S. commercial crude oil inventories rose by 1.8 million barrels from the previous week to 347.5 million barrels. Crude oil stocks are 3.2 million barrels less than a year ago but 10.9 million barrels more than
12
the five-year average for this date. California crude oil stocks rose 4.8 percent from the previous week to 16.7 million barrels and are 16.1 percent more than a year ago.
1
Retail gasoline and diesel prices and U.S. crude oil and product inventory estimates are from the Energy Information Administration of the U.S. Department of Energy. 2 Ethanol railcar prices are from Platts Oilgram and are average prices for prompt Southern California shipments minus a 45¢/gal federal excise tax credit for 2009 through 2011 prices and a 51¢/gal federal excise tax credit for prices prior to 2009. The federal excise tax credit expired at the end of 2011. California alkylate prices are also calculated from Platts Oilgram and include a 20¢/gal transportation and distribution cost from Gulf Coast to California. Spot wholesale prices for regular-grade California reformulated gasoline blendstock for oxygenate blending (CARBOB) are from Oil Price Information Service. 3 A higher spread between the state’s spot fuel prices and the New York Mercantile Exchange (NYMEX) futures price indicates supplies are tighter in California, and a lower spread indicates the market is relatively well-supplied compared to the rest of the country. The NYMEX futures price reflects the national market, while California Reformulated Gasoline Blendstock for Oxygenate Blending (CARBOB) is a gasoline blend unique to California and is usually sold at a premium to the NYMEX price. 4 California refinery production and inventory information is from the Petroleum Industry Information Reporting Act (PIIRA) database maintained by the California Energy Commission. 5 Staff has discontinued the reporting of combined CARB and EPA diesel production and inventories and will report only CARB diesel as of December 2009. EPA diesel is primarily for export from California. 6 Alaska North Slope (ANS) crude oil prices are from The Wall Street Journal. Brent and West Texas Intermediate (WTI) crude oil prices are from the Energy Information Administration. 7 Oil Rail transportation estimates are obtained from the Energy Information Administration of the U.S. Department of Energy and the American Association of Railroads
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