WTI crude prices have fallen back down into the $50.50-$51.00/b range this morning. WTI opened at $51.25/b today, a drop of $0.19, or 0.37%, below yesterday’s opening price. Current prices are $50.67/b, a continued fall of $0.69 below yesterday’s closing price. Crude and product prices rose and fell overnight, initially rising above closing levels then trending down in early morning trading.
Diesel opened at $1.6076/gallon this morning. This was a decrease of 0.25 cents (0.16%) below yesterday’s opening price. Current prices are $1.5971/gallon, a decrease of 0.92 cents from yesterday’s closing price.
Gasoline opened at $1.6548/gallon today, a significant drop of 1.37 cents, or 0.82%, from yesterday’s opening. Prices are $1.6396/gallon currently, down 1.3 cents from yesterday’s close.
Headlines from OPEC are having a varied impact on prices. On the upside, Saudi Arabian Minister Khalid Al-Falih stated that a nine-month extension is almost assured. But prices fell when the Minister noted that deeper cuts were probably unnecessary. OPEC and non-OPEC members have been meeting for over a week leading up to today’s formal session in Vienna, and markets have been in reaction mode. The announcements have generally been confident and constructive. However, this may suggest that anything other than stellar results from the final agreement will disappoint the market.
U.S. supply and demand data were constructive last week. For the third week running, the Energy Information Administration (EIA) has reported across-the-board inventory drawdowns: 4.432 mmbbls of crude, 0.787 mmbbls of gasoline, and 0.485 mmbbls of diesel. The crude drawdown greatly exceeded industry expectations, which had ranged from 1.5 mmbbls per the API and 2.7 mmbbls per Schneider Electric. The gasoline and diesel drawdowns fell short of the API data. The gasoline drawdown closely matched the Schneider Electric survey.
U.S. crude supply expanded last week. The EIA reported that U.S. crude production rose by 15 kbpd during the week ended May 19th. Crude imports decreased, but crude exports decreased as well, leaving a net surplus. Additional crude supply fed an increase in refinery utilization. Crude inputs to refining rose by 159 kbpd.
Apparent demand for gasoline rose by 252 kbpd during the week, while diesel demand rose by 144 kbpd, and jet fuel demand fell by 263 kbpd.
Overall, the Energy Information Administration (EIA) finds that U.S. gasoline supplies are abundant and prices are moderate moving into Memorial Day weekend. According to the EIA, “Relatively low crude oil spot prices, weaker year-over-year gasoline demand, and high gasoline inventories are all putting downward pressure on gasoline prices.” The EIA’s analysis follows as our second article today.
Gasoline prices heading into the 2017 Memorial Day weekend average $2.40 per gallon (gal) nationally, up from last year’s price of $2.30/gal before the holiday weekend. Despite the year-over-year increase, 2017 marks the second-lowest price ahead of the Memorial Day weekend since 2009, when the national average price of regular gasoline was $2.31/gal (Figure 1). Relatively low crude oil spot prices, weaker year-over-year gasoline demand, and high gasoline inventories are all putting downward pressure on gasoline prices.
The price of gasoline typically increases during spring due to the switch from winter-grade to more expensive summer-grade gasoline. This year, unlike many recent ones, prices have remained relatively stable as Memorial Day approaches.
U.S. gasoline prices are more closely tied to Brent crude oil prices than to West Texas Intermediate prices. Brent has been relatively stable in 2017, trading within an eight-dollar weekly average range. In addition, Brent spot prices have been low compared with recent history and are $23 below the three-year average as of May 19.
Gasoline demand has fallen from last year, putting further downward pressure on prices. As of May 19, the four-week average U.S. demand is 178,000 barrels per day (b/d), approximately 2%, below 2016 levels. Despite declining demand in 2017 so far, AAA (in association with IHS Markit) expects over 39 million Americans to travel this weekend, 1 million more travelers than last year and the highest travel volume since 2005.
High inventories, including finished gasoline and gasoline blending components, are also contributing to the downward pressure on gasoline prices. Gasoline inventories have been averaging near 2016 levels (near the upper bound of the five-year range), rising above last year’s levels for two weeks recently before dipping to 239.9 million barrels, slightly less than the 2016 inventory levels of 240.1 million barrels. This trend corresponds with strong refinery and blender net production of finished motor gasoline, which has been equal to or greater than 2016 4-week average levels for 10 straight weeks.
Retail gasoline prices vary significantly within the United States because of regional supply and demand balances, gasoline specification requirements, and taxes (Figure 2). Petroleum Administration for Defense District (PADD) 3 (Gulf Coast), which has approximately 50% of U.S. refining capacity and produces more gasoline than it consumes, typically has the lowest retail gasoline prices in the country. PADD 5 (West Coast) retail gasoline prices are often above the average U.S. price because of the region’s tight supply and demand balance, isolation from additional supply sources, and gasoline specifications that are more costly to meet. Average Gulf Coast and West Coast prices are, respectively, 25 cents/gal below and 53 cent/gal above the national average price.
Through May 22, U.S. regular gasoline prices, as measured in EIA’s weekly retail survey, have averaged $2.36/gal in 2017. EIA expects the 2017 summer season (April through September) gasoline price to average $2.39/gal, 16 cents higher than last summer. U.S. regular gasoline prices are forecast to average $2.34/gal in 2017 and $2.45/gal in 2018 (Figure 3).
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.