| We have seen another week of topsy turvy market mood swings » |
The problems the U.S. east coast refineries
As we pointed out, the problems the U.S. east coast refineries were having with their high crude oil input costs, which are based on Brent as opposed to WTI. This means that eastern seaboard refiners are at a huge disadvantage when compared to mid-west refiners which WTI discounted Western Canadian Select as their feedstock.
The input price differential is not isolated to the U.S. In fact, Valero Energy’s last quarter numbers were lower than expectations due to the fact that their Quebec City refinery dragged down results as this facility uses Brent priced crude.
This pricing problem has now grow exponentially with the Europeans now cutting back on production of gasoline and diesel for exactly the same reasons that being their refining margins are verging on negative with the high input costs not recoverable at the rack.
By: Roger McKnight, Senior Petroleum Analyst
Find out more about the fragility of the refining system in this week’s Energy Report. To find more about subscription rates contact us at info@en-pro.com.