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What’s the greatest concern for oil companies, right now?
It’s all about distillate inventories. Although total distillate inventories fell last week by 1.2 million barrels, at 139.6 million barrels, they are 30.7% higher than last year’s level and 27.7% higher than the past 5-year average. With U.S. distillate inventories in extremely good shape combined with the fact that the EIA is predicting demand will fall by 4.5%, oil refiners are concerned that their refining margins will fall. So what weapons will the oil companies use to combat this concern and what does it mean for crack-spreads, cardlock, and rack prices? For one thing it means this summer crack-spreads will be higher on gasoline and much lower on distillates. Read more in this week’s Energy Report.
By: Molson Robertson, Senior Risk Analyst, Energy Markets
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