EIA: Harvest season will boost US demand for distillate fuel oil in autumn
The U.S. Energy Information Administration stated on Friday that the consumption of distillate fuel oil is expected to rise in autumn, as diesel-powered equipment is used for harvesting and transporting crops. EIA stated that the EIA has found that the harvest peaks in mid-October, and continues through November. This coincides with the beginning of winter heating season, which also drives demand for distillate fuel oil. The weak demand for diesel in the United States has led to a sharp decline in refiners' margins.
Maritime Rule Change Stirs Fears of Diesel Shortage: Kemp
The International Maritime Organization (IMO) has so far resisted pressure to soften or postpone the implementation of new regulations requiring ships to use bunker fuels with a lower sulphur content from the start of 2020.That has prompted warnings from some analysts that the regulations will squeeze the availability of low-sulphur diesel and jet kerosene required by trucks, trains, aircraft, farmers and industry, resulting in big price increases.The regulations and any associated rise in fuel prices will occur in the run up to the next U.S.
Funds Build Record Long Positions in Heating oil, Diesel
Hedge funds have built record bullish positions in the middle distillates used as heating oil and diesel fuel – even as they become more cautious about the outlook for crude following a blistering rally. Hedge funds and other money managers had amassed a record net long position of 92 million barrels in U.S. heating oil futures and options and 137 million barrels in European gasoil by Jan. Portfolio managers boosted their net long position in heating oil by almost 10 million barrels and their net long position in gasoil by 0.8 million tonnes or about 6 million barrels.
Crude Oil Rally Stalls as Fuel Prices Soften
Surging prices for refined products, especially distillate fuel oil, led crude prices higher between June and November, but now fuels are slipping and putting crude under pressure. Gross refining margins for producing distillate fuel oil from U.S. crude rose from $14 per barrel in June to more than $25 per barrel in the middle of November. The U.S. distillate market started the year in substantial oversupply, with inventories well above the long-term average (http://tmsnrt.rs/2joA5Cw). But as a result of strong demand…
Distillate Fuel Market to Tighten in 2018: Kemp
U.S. refineries are struggling to meet booming demand for distillate fuel oil at home and in export markets which will leave the distillate market very tight in 2018. Even if the northern hemisphere winter is only averagely cold, the distillate market looks set to enter 2018 with lower than average stocks and fast-growing demand, which should keep prices and refining margins firm. The gross refining margin for turning Brent into U.S. heating oil has climbed to almost $19 per barrel from a recent low of less than $11 in May, despite record U.S. refinery production of distillate.
Booming Demand Erodes Oil Inventories: Kemp
Global oil consumption is growing rapidly, helping account for the decline in reported inventories, the recent surge in prices and the shift in futures markets from contango to backwardation. Consumption is much harder to measure than production, which is why the demand side of the market receives less attention. Even in the advanced economies, consumption data is only available with a delay of two months or more, and reliable data from emerging economies often not at all. Global demand assessments are therefore often educated guesswork, as analysts try to calculate how much oil has been used and how much is in storage.
U.S. Refiners Struggle to Meet Distillate Demand
U.S. refiners are struggling to meet the strong demand for heating oil and other distillates despite operations returning to near normal after Hurricane Harvey. Stocks of distillate fuel oil fell by another 2.6 million barrels to 135 million barrels last week, according to the Energy Information Administration (http://tmsnrt.rs/2yZN43X). Stocks have declined by 27 million barrels since the start of the year compared a 3 million barrel increase in the same period last year and an average rise of 4 million barrels over the last decade.
Global Trade Surge Fuel Oil Markets
Global trade is growing at the fastest rate for six years - which is both a symptom and a cause of the recovery in commodity markets. World trade volumes were up almost 5 percent year-on-year from May to July, according to estimates compiled by government economic planners in the Netherlands. Growth was four times faster than at the same point in 2016 (http://tmsnrt.rs/2y89NxC). Global trade and commodity markets are linked in a circular causal relationship, which is one of the most important in the macroeconomy and a key source of fluctuations in the business cycle.
US Refiners Process Record Volume of Crude as Demand Climbs
U.S. oil refineries are processing record volumes of crude but stocks of refined fuels remain well contained thanks to strong exports and demand at home. U.S. refineries processed 17.5 million barrels per day (bpd) of crude in the week ending on May 26, according to the U.S. Energy Information Administration ("Weekly Petroleum Status Report", EIA, June 1). Throughput was more than 1.2 million bpd higher than at the same point in 2016 and 2.2 million bpd above the 10-year seasonal average. Record refinery runs have helped pull down U.S.
U.S. Refiners Bet Big on Refined Export Markets
U.S. refiners have come out of maintenance season betting that big exports to Mexico and South America will help alleviate high product inventories and boost margins as the critical summer driving season nears. The first wave of earnings results from several large independent U.S. refiners showed that they are not chasing U.S. gasoline profits, due to already high inventories and steady-but-not-spectacular demand. Instead, they are taking advantage of demand from places like Mexico and South America, where sputtering local refineries cannot meet customer needs.
US O&G Industry Reaps the Benefits of International Trade
Rising exports have thrown a lifeline to U.S. shale producers and refiners, giving them an additional outlet at a time when the domestic market has been at risk of becoming saturated. The United States exported record quantities of natural gas, propane, gasoline, distillate fuel oil and light crude last year while continuing to import the heavy oils needed by its refineries. Gas exports increased by almost 30 percent in 2016 and have more than tripled in the last decade, limiting the build up of unused gas and supporting prices in recent months despite the warmest winter on record.
U.S. Diesel Demand Poised for Freight Driven Recovery
Freight movements across the United States are showing signs of sustained growth, which should help push domestic diesel consumption higher this year. Freight was hit hard in 2015/16 by the switch from coal to gas-fired power generation, the slump in oil and gas drilling, and more generally by an unplanned build up in business inventories. The seasonally adjusted volume of freight moved by road, rail, pipeline, barge and air declined by 3.4 percent between December 2014 and March 2016, according to the U.S. Bureau of Transportation Statistics (http://tmsnrt.rs/2lVAuey).
Trump May Not be Able to Save U.S. Coal
Donald Trump's election has thrown an apparent lifeline to beleaguered coal producers but he may not be able to do much to revive the fortunes of the industry. The U.S. coal industry has been a victim of the shale revolution and the enormous quantities of cheap gas that have been unleashed by hydraulic fracturing and horizontal drilling. There is not much a future Trump administration can do to protect coal producers, who have mostly been the victim of economic forces rather than politics and the Obama administration's "war on coal". U.S.
U.S. Coal Hopes for Respite after Perfect Storm
U.S. coal producers have been struck by a range of structural and cyclical factors that hit consumption hard and forced many of them to seek bankruptcy protection during 2015 and 2016. The problem of excess coal production and stocks built up gradually throughout 2014 and 2015 but the warm winter of 2015/16 pushed the industry into a crisis. Coal-fired power generation slumped by almost 23 percent during the winter of 2015/16 compared with winter 2014/15 while gas-fired generation fell only 12 percent. The backdrop to the industry's problems is concern about climate change and toxic emissions from coal-fired power plants…
Colder 2016-17 Winter to Boost U.S. oil and gas Demand
The U.S. summer driving season ends with Labor Day on Sep 5, and the attention of the energy markets is already switching to the forthcoming winter heating season. The winter of 2015/16 was the warmest on record, which sharply reduced consumption of both natural gas and heating oil (http://tmsnrt.rs/2bhIGoL). Average winter temperatures are very variable, but the winter of 2016/17 will almost certainly be colder, which should lead to a significant increase in gas and heating oil demand. Between December 2015 and February 2016…
La Nina to Boost U.S. Heating Oil Demand: Kemp
Middle distillates remain the one ray of hope for U.S. oil refiners still struggling to clear a glut of gasoline caused by over-production earlier in the year. Stocks of distillate fuel oil are higher than normal but have been trending down for the last 15 weeks according to the U.S. Energy Information Administration. Distillate stocks are currently around 152 million barrels, almost 8 million barrels higher than at the same point last year and more than 20 million barrels over the 10-year median. However…
Shale Gas Slump Hits U.S. Railroad Diesel Demand
Cheap natural gas has slashed coal traffic across the U.S. rail network and in turn hit demand for diesel, demonstrating the interlocking relationship between the country's energy and transport systems. U.S. rail freight declined more than 6 percent in the first 12 weeks of 2016 compared with a year earlier, according to the Association of American Railroads (AAR). Most categories of bulk freight were down compared with 2015 but by far the largest drop occurred in coal, the single-largest commodity hauled on the network.
Is U.S. Gasoline Consumption Overstated?
Strong growth in U.S. gasoline consumption has been one of the most important factors supporting oil prices in 2016, but some analysts question whether the official data is overstating the strength of gasoline demand. U.S. gasoline consumption has been running at a record seasonal rate since February, according to weekly data published by the Energy Information Administration (EIA) in its "Weekly Petroleum Status Report" (WPSR). But the consumption figures are so high that some analysts question whether the gasoline is actually being exported rather than consumed domestically (http://tmsnrt.rs/1ROcfvl).
Colder Winter Could Save Distillate Market: Kemp
The warmest winter for more than 30 years reduced fuel oil demand drastically in the United States in 2015/16 and left the country heavily oversupplied with heating oil. The good news for refiners and heating oil suppliers, however, is that winter 2016/17 will almost certainly be colder, boosting demand in the months ahead. Heating demand across the continental United States was 16 percent below average between December and February, according to the National Oceanic and Atmospheric Administration. Demand for heating fell more than 21 percent year on year compared with the winter of 2014/15…
La Nina may boost U.S. Heating Oil Demand
Middle distillates remain the one ray of hope for U.S. oil refiners still struggling to clear a glut of gasoline caused by over-production earlier in the year. Stocks of distillate fuel oil are higher than normal but have been trending down for the last 15 weeks according to the U.S. Distillate stocks are currently around 152 million barrels, almost 8 million barrels higher than at the same point last year and more than 20 million barrels over the 10-year median. However, stockpiles have fallen from a peak of 163 million barrels at the start of April…
