The staff of FUELSNews presents FUELSNews 360° Q2 2018
Quarterly Report: Market News & Information.
FUELSNews 360°, published four times a year by Mansfield Energy, analyzes and summarizes the prior quarter’s activity in the oil, natural gas, renewables and refined products industries. The purpose of this report is to provide our customers industry market data and trends both domestically and globally and deliver some insight into upcoming challenges facing the energy supply chain.
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Check out this excerpt from the Executive Summary:
The second quarter brought new heights for oil prices, with American crude oil rising from a beginning price of $63 to $74 by quarter’s end. Geopolitics was the resounding trend throughout the quarter – Syria, Libya, Iran and Venezuela each took their turn in propelling oil prices higher.
Oil Market Summary
The most notable event of the quarter was President Trump’s withdrawal from the Iran nuclear deal in early May – sending oil prices hurdling above $70 for the first time in years. Fresh sanctions on Iranian oil output will effectively remove 1 million barrels per day from the market – a major blow to a market that was roughly in balance at the end of Q1.
Other production outages in Venezuela, Canada and Libya combined to keep prices elevated throughout the quarter, despite OPEC’s commitment to mitigate supply shortages by increasing production by 1 million barrels per day.
At the fuel price level, refined products continued their steady rise as well. Diesel prices for the quarter were 11.5% higher than in Q1, while gasoline prices zoomed 13% higher. Around the country, refiners pumped out fuel at record pace, with refinery utilization rising to its highest level in a decade in June.
Looking ahead to Q3, markets are expected to cool as the numerous supply outages from Q2 are slowly corrected. Check out what major banks and analysis groups are expecting for the second half of the year on page 8. While supply is expected to normalize in Q3, consumers should be prepared for unexpected price shocks – spare production capacity around the world is limited, so a surprise pipeline outage or export disruption could easily cause prices to rise even higher than Q2 highs.
At the regional level, outages created disparate price impacts for consumers. The Colonial Pipeline, the dominant supply source for markets between Houston and Maryland, took Line 3 and Line 4, which transport gasoline and diesel from Greensboro, NC, to Linden, NJ, offline for maintenance in early March. The outage was short-lived, but consumers felt the price impact temporarily, particularly in premium gasoline prices. Colonial also announced Line 25, which feeds western Virginia, will be shut down in September, creating additional fuel costs for those living in Roanoke, VA. Check out Chris Carter’s article on the Gulf Coast and Southeast on page 20.
In the Great Lakes region, an explosion at Husky’s Superior refinery has taken a significant portion of local supplies offline, requiring fuel to be shipped via pipeline from the Twin Cities. While fuel supplies are available in the Duluth-Superior area, trucking capacity has been stretched thin. Read more in Nate Kovacevich’s article on page 23.
On the West Coast, numerous refinery outages contributed to strong upward pressure on fuel prices. Additionally, the Olympic Pipeline in the Pacific Northwest experienced a 4-day outage, interrupting supplies. California already has strong demand during the summer, so any unplanned supply outages amplify the pressure pushing prices higher. Amy Nguyen provides more details on page 24.
One question frequently asked of Mansfield’s customer team is why fuel delivery tickets show two different gallon quantities – net and gross. On page 31, FUELSNews analyst Madi Burton provides insight into what those different quantities mean, why they came about, and which metric is most common in your area.
Summer is upon us, and with it comes the risk of hurricanes wreaking devastation and disrupting fuel supplies. The NOAA predicts a high probability of hurricane activity being at or above average this season, meaning fleets must be proactive to ensure last year’s challenges are not repeated. Emergency response expert Will Shinn provides best practices on page 32 to help fleets ensure reliable fuel supplies during emergency situations.
Do you know what’s in your tank? According to EPA studies, 83% of tanks have moderate to severe corrosion. Dirty fuel can have a hidden impact on your vehicles, robbing you of fuel efficiency and causing engine malfunctions. Clint Hamlin explains on page 36 how to test your fuel and restore vehicles back to full efficiency.
Closing this quarter’s FUELSNews 360⁰ is a report from FUELSNews lead writer Alan Apthorp on the effects of IMO 2020 on fuel prices. This change in maritime fuel specifications has been described as the “biggest change in the history of the oil market” according to researchers at Energy Aspect. Find out how fuel prices will be impacted in 2019 and 2020 by this marine law change, and what you can do to get ahead of the increase.
We hope you enjoy this quarter’s issue of FUELSNews 360°. If you have any questions, or would like to request additional copies, email us at firstname.lastname@example.org.