After January weakness, gasoline crack spreads increase in February (2/26/2020)

U.S. Gulf Coast gasoline crack spreads (the difference between wholesale gasoline prices and crude oil prices that is often used to estimate refining margins) for January 2020 were relatively small compared with the previous five-year (2015–19) average, but they increased in February and as of February 25 are now wider than the five-year average (Figure 1). In January, weak gasoline demand (as measured by product supplied), high gasoline inventories, and high refinery runs all contributed to the narrow gasoline crack spreads. In February, refinery outages, increased gasoline demand, and flat West Texas Intermediate (WTI) crude oil prices contributed to the growing Gulf Coast crack spreads. ... More »

Forecast growth in demand for U.S. petroleum and other liquids is not driven by transportation and not supplied by refineries (2/20/2020)

The U.S. Energy Information Administration’s (EIA) February Short-Term Energy Outlook (STEO) forecasts that in 2021, U.S. consumption (as measured by product supplied) of total petroleum and other liquid fuels will average 20.71 million barrels per day (b/d), surpassing the 2007 pre-recession level of 20.68 million b/d. However, the drivers of this consumption growth have changed. Since the 2007–09 recession, U.S. consumption growth has shifted toward liquid fuels that are used primarily outside the transportation sector and are supplied mostly from non-refinery sources. Despite this shift away from domestic demand for refinery-produced fuels, U.S. refinery runs have increased, and the excess products have been exported, greatly contributing to the United States becoming a net exporter of petroleum in September 2019. EIA expects these trends to continue for at least the next 10 years. ... More »

EIA revises global liquid fuels demand growth down because of the coronavirus (2/12/2020)

In the February 2020 update of its Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts that global liquid fuels demand will average 101.7 million barrels per day (b/d) in 2020, 1.0 million b/d more than the 2019 average. This latest estimate of 2020 global liquid fuels demand is 378,000 b/d less than was forecast in the January 2020 STEO (Figure 1). The difference between the forecasts is driven by a combination of lower-than-expected heating fuel consumption caused by the Northern Hemisphere’s warmer-than-expected winter, an expected slowing of economic growth in general, and the particular economic effects of the 2019 novel coronavirus (COVID-19) outbreak. ... More »

Geopolitical developments continue to drive maritime crude oil tanker rates (2/5/2020)

Following nearly 10 years of relative price stability, shipping rates for crude oil tankers have fluctuated widely since mid-2018 because of a combination of geopolitical events and changes to maritime fuel specifications. The U.S. Energy Information Administration (EIA) estimates that an average of 100.8 million barrels per day (b/d) of liquid fuels were consumed globally in 2019. Approximately 42% of global crude oil was transported by waterborne vessels. Although some—typically larger—oil companies own and operate their own fleet of tankers, most crude oil is transported by specialized shipping companies, which charge either the buyers or sellers a fee for their service, known as the freight or charter rate. As seen in Figure 1, these rates charged by shipping companies can vary considerably depending on both macro-level factors, such as the supply of available vessels and the demand for crude oil, and micro-level factors, such as a vessel’s hull configuration, age, route, size, and the share of its capacity that a delivery will use.net exporter in September 2019. ... More »