WTI crude prices have retreated below $50/b this morning. WTI opened at $49.68/b today, a drop of $1.03, or 2.03%, below Friday’s opening price. Current prices are $49.91/b, $0.29 above Friday’s closing price. Product prices also dropped on Friday, then leveled off and opened slightly higher this morning.
Diesel opened at $1.5557/gallon in today’s session. This was a decline of 2.33 cents (1.48%) below Friday’s opening price. Current prices are $1.5622/gallon, up by 0.89 cents from Friday’s closing price.
Gasoline opened at $1.6416/gallon today, down 2.67 cents, or 1.6%, from yesterday’s opening. Prices are $1.6473/gallon currently, up by 0.28 cents from yesterday’s close.
Friday’s market opened with crude and product prices down, and they were heading to finish the week in the red. Prices continued to weaken during the day. Crude ended the day down by over a dollar per barrel, diesel prices dropped by 2.57 cents/gallon, and gasoline prices dropped by 2.38 cents/gallon.
Supply-demand balance concerns appeared to be on the rise. The EIA data for the week had shown an increase in U.S. crude production of 17 kbpd, and the Baker Hughes Rig Count data released on Friday showed an addition of 10 active rigs, bringing the total to 857. This is the highest active rig count since the week of September 4th, 2015.
The possibility of an extension to the OPEC-NOPEC production cut agreement has helped support prices. Market faith in the extension appeared to weaken last week, but this morning, it may be reviving. On Thursday, Saudi Arabia’s Oil Minister, Khalid al-Falih, stated that six OPEC members so far favor an extension of the cuts: Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Oman and Bahrain. It may be no coincidence that these six countries are also the founding members of the Gulf Cooperation Council (GCC,) which was founded in 1981 as the “Cooperation Council of the Arab States of the Gulf.” These are the key Arab states bordering the Persian Gulf, excluding Iraq. An extension would need full consensus, including Iraq and Iran. It is also possible that an extension might not be the same as the original agreement. It might not be a six-month term, for example, and the allocation of cuts might be different.
The production cut agreement has been successful so far. Over the weekend, the OPEC-NOPEC technical committee reported that the compliance level had hit 98% in March. The OPEC participants had exceeded their pledged cuts, achieving 103% compliance. The committee recommends an extension of the cuts.
EIA’s April 2017 Short-Term Energy Outlook (STEO) expects that electricity generation fueled by natural gas this summer (June, July, and August) will be lower than last summer, but it will continue to exceed that of any other fuel, including coal-fired generation, for the third summer in a row. The projected share of total U.S. generation for natural gas is expected to average 34%, which is down from 37% last summer but still exceeds coal’s generation share of 32%.
Based on data from the National Oceanic and Atmospheric Administration (NOAA), EIA estimates that average U.S. population-weighted cooling degree days in the summer of 2016 reached the highest level on record. NOAA projections for this summer indicate cooling degree days will be 11% lower than last year. These milder expected temperatures lead to forecast U.S. summer electricity generation of 1.16 billion megawatthours, which would be 2.4% lower than generation last summer.
Generation fueled by natural gas typically peaks in the summer when power plant operators use natural gas-fired combustion turbines during the hottest part of the day to meet electricity demand for air conditioning. Natural gas first exceeded coal as the nation’s primary electricity fuel on a monthly basis in April 2015 and on an annual basis in 2016. During the summer of 2016, at a time when natural gas prices were relatively low, 37% of U.S. electricity generation came from natural gas and 33% came from coal. A decade before that, in summer 2006, 25% came from natural gas and 46% from coal.
The use of natural gas in the power sector is sensitive to natural gas prices. As natural gas prices have risen, the natural gas share of the electricity generation mix has fallen slightly. Over the first three months of 2017, the Henry Hub natural gas price averaged $3.01 per million Btu (MMBtu) compared with $2.00/MMBtu during the same period of 2016. As a result, the natural gas share of the U.S. electricity mix fell from 32% in the first quarter of 2016 to 29% in the first quarter of this year, while coal’s share of generation rose from 29% to 31% over that same period. EIA expects that the Henry Hub price will continue to average slightly more than $3.00/MMBtu through the summer.
At the national level, shares of both natural gas and coal are expected to be lower than last summer, as output from hydroelectric and other renewable generators is expected to increase. The Midwest region is the only area of the country in which coal fuels more than half of summer electricity generation (54%). In other regions, no single fuel provides the majority of electricity generation during the summer. The Northeast and South regions are close to this level, with natural gas accounting for an expected 44% and 43% of total summer generation, respectively.
Western states have a more diverse mix of energy sources for electricity generation, including access to some of the largest sources of hydropower in the United States. After enduring an exceptional drought, California experienced record levels of precipitation and snowpack this past winter, and hydroelectricity’s share of generation in the West is expected to rise from 20% last summer to 27% this summer. This increase, along with increased solar capacity because of new solar additions, should reduce the need for natural gas-fired generation in the West, where the forecast generation share falls from 34% to 27%.
WTI crude prices are in the $50.50-$50.75/b range this morning. Wednesday brought a sharp downward price correction, and prices yesterday stagnated. WTI opened at $50.71/b today, an increase of $0.08, or 0.16%, above yesterday’s opening price. Current prices are $50.60/b, $0.11 below yesterday’s close. Product prices also dropped sharply Wednesday. Like crude, product prices levelled and were flattish Thursday, with gasoline showing more price strength than diesel.
Diesel opened at $1.579/gallon in today’s session. This was a decline of 0.4 cents (0.25%) below yesterday’s opening price. Current prices are $1.5755/gallon, slightly down by 0.034 cents from yesterday’s closing price.
Gasoline opened at $1.6682/gallon today, up 0.63 cents, or 0.38%, from yesterday’s opening. Prices are $1.6724/gallon currently, up slightly by 0.19 cents from yesterday’s close.
Last week, prices had risen partly in response to geopolitical risk stemming from North Korea’s missile test. This week, the market discounted the threat, and price gains began to be reversed. Prices dropped sharply in the hours after the release of the EIA’s weekly supply data, even though the data were not entirely bearish. The crude stock draw should have been supportive of crude prices, for example. But it appeared to be overshadowed by a surprise build in gasoline inventories, But it appeared to be overshadowed by a surprise build in gasoline inventories, plus a drop in demand amounting to 439 kbpd of refined products. This included 52 kbpd of gasoline and 458 kbpd of diesel.”This included 52 kbpd of gasoline and 458 kbpd of diesel. Domestic fuel production increased, with an additional 241 kbpd of crude runs. The softening of the supply-demand balance contributed to the downward price movement, but it was not so dramatic that it was the only factor at work. Goldman Sachs concludes that the selloff was driven by technicals rather than fundamentals. Overall, market prices are back where they were at the beginning of the month.
Crude prices this week were trending down gently until Wednesday morning, when the oil complex experienced a sharp downward price correction. Last week’s price gains had come about partly because of increased geopolitical risk, heightened by North Korea’s missile tests and aggressive language all around. But the market discounted the risk this week. Prices began to fade, slowly at first, then with a sharp plunge as other fundamentals and technicals prompted selling. WTI prices tested some lows on Wednesday, almost breaking down below $50/b again. Product prices also collapsed on Wednesday, then leveled off on Thursday and this morning. The week is heading to an end in the red, though the increasing likelihood of an extension of the OPEC-NOPEC production cut agreement is helping keep prices above $50/b. Overall, prices are back where they were at the beginning of the month.
WTI crude prices opened the week at $52.97/b. WTI opened this session at $50.71/b, a major drop of $2.26, or 4.3%, from Monday’s opening. During the week, prices ranged from a low of $50.09/b on Wednesday to a high of $53.21 on Monday, a range of $3.12. Current prices are $50.60/b, down $0.11 from yesterday’s close.
Diesel prices opened Monday at $1.647/gallon. Diesel opened this morning at $1.579/gallon, a large drop of 4.1%, or 6.8 cents, for the week. Prices ranged from a low of $1.5696/gallon on Wednesday to a high of $1.6314/gallon on Monday, a large price range of 8.09 cents. Prices currently are $1.5755/gallon, slightly down by 0.034 cents from yesterday’s closing price.
Gasoline prices opened Monday at $1.7333/gallon. Gasoline opened today at $1.6683/gallon, a large drop of 3.8%, or 6.5 cents, for the week. Prices ranged from a low of $1.65/gallon on Wednesday to a high of $1.7413/gallon on Monday, a large range of 9.13 cents. Prices are $1.6724/gallon currently, up slightly by 0.19 cents from yesterday’s close.
During the week, prices were supported Monday when Schneider Electric’s industry survey predited a crude stock draw and significant product inventory drawdowns. The API numbers were less optimistic, showing a drawdown of crude and diesel, but a build of gasoline. The official EIA data was released later Tuesday, and it largely corroborated the API numbers. The data reported a crude stock draw of 1.034 mmbbls, a diesel stock draw of 1.955 mmbbls, and an unexpected gasoline stock build of 1.542 mmbbls.
The EIA numbers also showed a drop in demand amounting to 439 kbpd of refined products, including 52 kbpd of gasoline and 458 kbpd of diesel. Domestic fuel production increased, however, with an additional 241 kbpd of crude runs. The softening of the supply-demand balance contributed to the downward price movement. Still, it was not so dramatic that it was the only factor at work. Goldman Sachs concludes that the selloff was driven by technicals rather than fundamentals.
The Energy Information Administration (EIA) released its weekly data on diesel and gasoline retail prices for the week ended April 17th, 2017. Prices for both fuels rose during the week, as they have for the past three weeks.
For the current week ended April 17th, diesel prices rose by 1.5 cents to an average price of $2.597/gallon.
PADD 1 retail diesel prices increased 1.1 cents to $2.631/gallon. New England prices edged down by 0.1 cents to $2.638/gallon, the only submarket where diesel prices did not increase. Central Atlantic diesel prices rose by 2.2 cents to average $2.783/gallon. Lower Atlantic prices increased by 0.6 cents to average $2.522/gallon. Overall, PADD 1 prices were 41.1 cents/gallon above their prices for the same week last year. PBF Energy will be shutting a 46 kbpd diesel hydrotreater at its 160 kbpd Paulsboro, New Jersey, refinery, for a three- to four-week maintenance period. Phillips 66’s 238 kbpd Bayway, New Jersey, refinery, remains running at very low throughput. It was scheduled to restart in mid-March, including its crude unit, its 145 kbpd cat cracker, its cat reformer, and its diesel hydrotreater. But delays pushed back the restart until the 31st, and since then, poor economics have kept throughput low.
In the Midwest PADD 2 market, retail diesel prices increased 2.1 cents to average $2.536/gallon. This price was 42.4 cents/gallon above its level for the same week last year. Tesoro closed its 75 kbpd Mandan, North Dakota, refinery for a full-plant overhaul, earlier than the originally scheduled April 4th date. The overhaul includes a diesel hydrotreater. BP restored normal operations at a 110 kbpd crude unit (one of three crude towers) at its 413.5 kbpd Whiting, Indiana, refinery. BP will close its 55 kbpd diesel hydrotreater during the first half of May for planned maintenance.
In the Gulf Coast PADD 3, retail diesel prices rose 1.2 cents to $2.458/gallon. This price was 41.2 cents higher than in the previous year. ExxonMobil shut down the 65 kbpd hydrocracker at its 345 kbpd Beaumont, Texas refinery to remedy a mechanical failure. This refinery has a crude unit and a 48 kbpd coker in maintenance currently. ExxonMobil restarted the 29.5 kbpd hydrocracker at its Baytown, Texas, refinery, which was closed to repair a leak. Marathon resumed planned rates at the 238 kbpd crude unit at its 522 kbpd Garyville, Louisiana, which was down for unplanned repairs. Valero is restoring normal rates at the 50 kbpd hydrocracker at its 350 kbpd Port Arthur, Texas, refinery. The unit was closed March 30th because of a mechanical failure. Motiva continues to have issues repairing the H-Oil unit at its 230 kbpd Convent, Louisiana, refinery. Reports indicate that some of the piping infrastructure will need replacement, a process that may take two to three months.
In the Rocky Mountains PADD 4 market, retail diesel prices increased 1.2 cents to $2.652/gallon. This price was 48.1 cents higher than in the prior year.
In the West Coast PADD 5 market, diesel prices at the pump increased by 1.9 cents to average $2.877/gallon. This price was 50.6 cents above its level last year. Prices excluding California rose 1.9 cents to $2.791/gallon, which was 54 cents above the retail price for the same week last year. California diesel prices increased by 1.1 cents to an average price of $2.946/gallon, 48 cents higher than last year’s price. Shell is preparing for maintenance at the 42 kbpd hydrocracker at its 165 kbpd Martinez, California, refinery, to commence at the end of April or early May. Valero was forced to shut down the 34 kbpd hydrocracker at its 145 kbpd refinery at Benicia, California for unplanned repairs. BP shut the 65 kbpd hydrocracker at its 225 kbpd Cherry Point, Washington, refinery for an overhaul. PBF Energy reduced throughput at the 88 kbpd VGO hydrotreater at its 149 kbpd Torrance, California, refinery, for more unplanned repairs. This unit is scheduled for a seven-week overhaul in late April/Early May. The hydrocracker is scheduled for a five-week overhaul.
US retail gasoline prices increased by 1.2 cents for the week ended April 17th, to $2.436/gallon. This price was 29.9 cents higher than for the same week in 2016. Gasoline prices are at their highest levels since the week ended August 31st, 2015.
In the East Coast PADD 1, prices for gasoline rose by 2.3 cents to $2.397/gallon. This price was 30 cents higher than last year’s price. Prices jumped by 4.7 cents in New England to $2.373/gallon. Central Atlantic market prices rose by 4.1 cents to $2.508/gallon. Prices in the Lower Atlantic market edged up by 0.2 cents, to bring prices to an average of $2.32/gallon, 29.7 cents higher than last year’s average price. Philadelphia Energy Solutions restarted the 6 kbpd alkylation unit at its Point Breeze, Philadelphia, refinery, which had been closed March 29th for unplanned repairs.
The only PADD where gasoline prices did not rise was the Midwest PADD 2 market, where retail gasoline prices declined by 2.2 cents to average $2.339/gallon. Gasoline pump prices were 28.2 cents higher than they were one year ago.
Tesoro was forced to on Friday to close its 75 kbpd Mandan, North Dakota, refinery for a full-plant overhaul after a power outage and steam plant failure. The refinery includes a cat cracker and a cat reformer. The overhaul was originally scheduled for April 4th. Phillips 66 is in the process of restarting its314 kbpd Wood River, Illinois, refinery.
In the Gulf Coast PADD 3 market, gasoline prices were hiked by 4.9 cents to average $2.241/gallon. Prices for the week were 33.1 cents higher than for the same week in 2016. Valero had a power outage at the 95 kbpd Three Rivers, Texas, refinery, which took down its cat reformer. Valero was forced to close the 86 kbpd cat cracker and 15 kbpd alkylation unit at its 225 kbpd Texas City refinery. LyondellBasell’s Houston refinery continues to work on repairs to the cooling unit at its 110 kbpd cat cracker, which was seriously damaged by a fire on March 15th. Phillips 66 restored operations at the 35 kbpd cat cracker at its 146 kbpd Borger, Texas refinery following overhaul. Motiva continues to have issues repairing the H-Oil unit at its 230 kbpd Convent, Louisiana, refinery, and repairs are expected to take up to three months. Citgo is experiencing delays overhauling the 46 kbpd cat cracker at its 425 kbpd Lake Charles, Louisiana, refinery. Phillips 66 has been delayed completing maintenance the 60 kbpd coker at its 275 kbpd Westlake, Louisiana, refinery.
In the Rocky Mountains PADD 4 region, gasoline prices jumped 4.3 cents to average $2.376/gallon. This price was 29.8 cents higher than at the same time in 2016.
In the West Coast PADD 5 market, retail gasoline prices rose by a penny to an average price of $2.883/gallon. This was 29.2 cents higher than at the same time a year ago. Excluding California, prices rose by 1.3 cents to an average of $2.652/gallon. This was 37.3 cents higher than at the same time in 2016. In California, prices increased 0.9 cents to an average pump price of $3.017/gallon. California remained the only state market to have gasoline prices top $3 once again. Prices were 24.6 cents higher than last year’s price for the same week. Los Angeles prices rose by 2.3 cents to average $3.055/gallon. San Francisco pump prices increased by 1.1 cents to average $3.061/gallon, 23.9 cents above last year’s price. Seattle prices rose 0.4 cents to average $2.882/gallon, 57.3.0cts higher than prices one year ago. Tesoro shut the 26 kbpd cat reformer and the 39 kbpd naphtha hydrotreater at its 120 kbpd Anacortes, Washington, refinery, for unplanned repairs, and the downtime has been extended.