RIGZONE
"White House Eyes Expanding Northeast Diesel Reserve"
by Bloomberg | J.Jacobs, A.Hordern, A.Natter
Thursday, October 27, 2022
The Biden administration is considering ways to expand a little-used emergency fuel reserve in New England as the East Coast grapples with shortages of both gasoline and diesel, according to people familiar with the matter.
Officials are concerned the 1 million-barrel reserve won’t be enough to counter a severe disruption this winter and are considering numerous options to bolster supplies, according to the people, who weren’t authorized to discuss internal White House deliberations on the record.
One option under discussion is asking Congress to lift a statutory cap on how much oil can be held in the reserve.
Also on the table: requiring private companies to hold minimum inventory levels, which also would require congressional approval, and export curbs that could be imposed through executive powers.
No decisions have been made, the people said.
The White House has multiple tools for addressing shortages, a senior administration official said.
With just two weeks until the midterm elections, the US is facing the prospect of higher fuel prices amid an escalating supply crunch.
Gasoline inventories are at an 8-year seasonal low while supplies of diesel -- used for heating and trucking -- remain at the lowest level ever for this time of year.
On the East Coast, the situation is getting more dire with infrastructure constraints limiting fuel shipments and prompting some suppliers to start rationing fuel.
That’s alarmed the Biden administration, which contends that private industry hasn’t adequately responded to its requests to ramp up supplies of gasoline and diesel in the Northeast.
But given market dynamics and infrastructure constraints -- including the century-old Jones Act that can raise the cost of shipping to US ports -- many suppliers can make more money sending fuel overseas than shipping it to the East Coast.
US petroleum exports surged to a new record last week.
The Biden administration has already started laying the groundwork for storing more emergency fuel inventories, finalizing new rules meant to incentivize suppliers to sell diesel and gasoline to the government.
--With assistance from Chunzi Xu.
https://www.rigzone.com/news/wire/white ... 1-article/
OIL, NATURAL GAS
Re: OIL, NATURAL GAS
REUTERS
"Column: U.S. diesel shortage increasingly likely until economy slows"
By John Kemp
October 27, 2022
LONDON, Oct 27 (Reuters) - U.S. diesel supplies are becoming critically low with shortages and price spikes likely to occur in the next six months unless and until the economy and fuel consumption slow.
Stocks of diesel and other distillate fuel oils were just 106 million barrels on Oct. 21, the lowest for the time of year since the U.S. Energy Information Administration (EIA) started collecting weekly data in 1982.
Distillate inventories were a massive 26 million barrels (-20% or -1.94 standard deviations) below the seasonal average for the previous ten years (“Weekly petroleum status report”, EIA, Oct. 26).
The deficit has been worsening steadily since the start of the year when stocks were 15 million barrels (-11% or -1.18 standard deviations) below the ten-year average.
By the end of July, stocks had already fallen to 113 million barrels, the lowest since 1996 and before that 1954, based on the most recent data available from the EIA’s more comprehensive monthly surveys.
In terms of consumption, however, inventories at the end of July were equivalent to just 30 days of demand, the lowest seasonal level in monthly records going back to 1945.
Since then, the inventory position has tightened even further, with stocks estimated to have fallen to a record seasonal low of fewer than 27 days of demand in October.
Reflecting the intensifying fuel shortage, futures prices for ultra-low sulphur diesel (ULSD) delivered in New York Harbor in December are trading at a premium of $60 per barrel over Brent.
The twelve-month calendar spread for ultra-low sulphur diesel futures has flared out to a backwardation of $50 per barrel from less than $10 this time last year, as traders anticipate physical shortages.
As a result, retail diesel prices including applicable taxes are now $1.45 per gallon higher than for gasoline, a record premium, up from just 24 cents per gallon a year ago."
Distillate fuel oil is primarily used in freight transport, manufacturing, farming, mining and the oil and gas industry itself, so consumption is strongly influenced by the economic cycle.
Growth in distillate consumption has been closely correlated with changes in industrial production estimated by the U.S. Federal Reserve and manufacturing activity in surveys by the Institute for Supply Management.
Stabilising then rebuilding inventories to more comfortable levels will require a significant slowdown in freight movements and manufacturing activity.
There are early indications manufacturing and freight activity peaked in the third quarter of 2022.
If confirmed that would take some of the pressure of distillate inventories.
But a deeper and more prolonged slowdown in the United States and/or in Europe and Asia will be needed to boost inventories significantly.
Rebalancing diesel supply will likely require a further rise in interest rates and tighter financial conditions in the United States and other major economies to reduce fuel consumption to more sustainable levels.
John Kemp is a Reuters market analyst. The views expressed are his own
Editing by Kirsten Donovan
https://www.reuters.com/business/energy ... 022-10-27/
"Column: U.S. diesel shortage increasingly likely until economy slows"
By John Kemp
October 27, 2022
LONDON, Oct 27 (Reuters) - U.S. diesel supplies are becoming critically low with shortages and price spikes likely to occur in the next six months unless and until the economy and fuel consumption slow.
Stocks of diesel and other distillate fuel oils were just 106 million barrels on Oct. 21, the lowest for the time of year since the U.S. Energy Information Administration (EIA) started collecting weekly data in 1982.
Distillate inventories were a massive 26 million barrels (-20% or -1.94 standard deviations) below the seasonal average for the previous ten years (“Weekly petroleum status report”, EIA, Oct. 26).
The deficit has been worsening steadily since the start of the year when stocks were 15 million barrels (-11% or -1.18 standard deviations) below the ten-year average.
By the end of July, stocks had already fallen to 113 million barrels, the lowest since 1996 and before that 1954, based on the most recent data available from the EIA’s more comprehensive monthly surveys.
In terms of consumption, however, inventories at the end of July were equivalent to just 30 days of demand, the lowest seasonal level in monthly records going back to 1945.
Since then, the inventory position has tightened even further, with stocks estimated to have fallen to a record seasonal low of fewer than 27 days of demand in October.
Reflecting the intensifying fuel shortage, futures prices for ultra-low sulphur diesel (ULSD) delivered in New York Harbor in December are trading at a premium of $60 per barrel over Brent.
The twelve-month calendar spread for ultra-low sulphur diesel futures has flared out to a backwardation of $50 per barrel from less than $10 this time last year, as traders anticipate physical shortages.
As a result, retail diesel prices including applicable taxes are now $1.45 per gallon higher than for gasoline, a record premium, up from just 24 cents per gallon a year ago."
Distillate fuel oil is primarily used in freight transport, manufacturing, farming, mining and the oil and gas industry itself, so consumption is strongly influenced by the economic cycle.
Growth in distillate consumption has been closely correlated with changes in industrial production estimated by the U.S. Federal Reserve and manufacturing activity in surveys by the Institute for Supply Management.
Stabilising then rebuilding inventories to more comfortable levels will require a significant slowdown in freight movements and manufacturing activity.
There are early indications manufacturing and freight activity peaked in the third quarter of 2022.
If confirmed that would take some of the pressure of distillate inventories.
But a deeper and more prolonged slowdown in the United States and/or in Europe and Asia will be needed to boost inventories significantly.
Rebalancing diesel supply will likely require a further rise in interest rates and tighter financial conditions in the United States and other major economies to reduce fuel consumption to more sustainable levels.
John Kemp is a Reuters market analyst. The views expressed are his own
Editing by Kirsten Donovan
https://www.reuters.com/business/energy ... 022-10-27/
Re: OIL, NATURAL GAS
RIGZONE
"Oil Settled Up for the Week"
by Bloomberg | Julia Fanzeres and Alex Longley
Friday, October 28, 2022
Oil rallied as US fuel stockpiles dropped and exports rose to a record, signaling robust demand despite recent bearish economic trends.
West Texas Intermediate futures settled near $88 a barrel after posting a 3.4% weekly gain.
The US exported a record amount of fuel last week while East Coast diesel inventories dropped to precariously low levels, according to government data.
Tight fuel inventories heading into winter bolstered crude markets even as Wall Street digested uneven corporate earnings.
Earlier on Friday, crude slipped as a stronger dollar made commodities priced in the currency less attractive.
China’s economic growth outlook is darkening as investors bet Beijing will be slow to abandon its Covid-zero policy, while in Europe the French and Spanish economies slowed.
“Crude prices posted a weekly gain as diesel supplies approach dangerously low levels and on hopes China’s economy could rebound before the end of the year,” said Ed Moya, senior market analyst at Oanda Corp.
Oil is on course to end the month higher, following a four-month decline.
A decision by the Organization of Petroleum Exporting Countries and its allies to cut production in November and looming European Union sanctions on Russia have tightened the supply outlook.
In addition, refiners in top importer China have snapped up millions of barrels as they plan to ramp up fuel exports.
Prices:
WTI for December delivery fell $1.18 to settle at $87.90 in New York.
Brent for December settlement lost $1.18 to settle at $95.77.
Widely-watched time spreads continue to hold in backwardation, a bullish pattern signaling tightness.
Brent’s prompt spread -- the difference between the two nearest contracts -- was $2 a barrel, up from $1.27 a month ago.
Meanwhile, Exxon Mobil Corp. and Chevron Corp. amassed more than $30 billion in combined net income as politicians blast Big Oil for raking in massive profits at a time when consumers are struggling with soaring inflation and energy shortages worldwide.
https://www.rigzone.com/news/wire/oil_s ... 3-article/
"Oil Settled Up for the Week"
by Bloomberg | Julia Fanzeres and Alex Longley
Friday, October 28, 2022
Oil rallied as US fuel stockpiles dropped and exports rose to a record, signaling robust demand despite recent bearish economic trends.
West Texas Intermediate futures settled near $88 a barrel after posting a 3.4% weekly gain.
The US exported a record amount of fuel last week while East Coast diesel inventories dropped to precariously low levels, according to government data.
Tight fuel inventories heading into winter bolstered crude markets even as Wall Street digested uneven corporate earnings.
Earlier on Friday, crude slipped as a stronger dollar made commodities priced in the currency less attractive.
China’s economic growth outlook is darkening as investors bet Beijing will be slow to abandon its Covid-zero policy, while in Europe the French and Spanish economies slowed.
“Crude prices posted a weekly gain as diesel supplies approach dangerously low levels and on hopes China’s economy could rebound before the end of the year,” said Ed Moya, senior market analyst at Oanda Corp.
Oil is on course to end the month higher, following a four-month decline.
A decision by the Organization of Petroleum Exporting Countries and its allies to cut production in November and looming European Union sanctions on Russia have tightened the supply outlook.
In addition, refiners in top importer China have snapped up millions of barrels as they plan to ramp up fuel exports.
Prices:
WTI for December delivery fell $1.18 to settle at $87.90 in New York.
Brent for December settlement lost $1.18 to settle at $95.77.
Widely-watched time spreads continue to hold in backwardation, a bullish pattern signaling tightness.
Brent’s prompt spread -- the difference between the two nearest contracts -- was $2 a barrel, up from $1.27 a month ago.
Meanwhile, Exxon Mobil Corp. and Chevron Corp. amassed more than $30 billion in combined net income as politicians blast Big Oil for raking in massive profits at a time when consumers are struggling with soaring inflation and energy shortages worldwide.
https://www.rigzone.com/news/wire/oil_s ... 3-article/
Re: OIL, NATURAL GAS
FOX BUSINESS NEWS
"Fuel company issues diesel shortage warning, says conditions 'rapidly devolving'"
Timothy Nerozzi
29 OCTOBER 2022
A major fuel supply and logistics company is raising a red flag on upcoming diesel fuel shortages.
Mansfield Energy issued the alert Friday stating there was a developing diesel fuel shortage in the southeastern region of the United States.
The company speculated that the shortage could be generated from "poor pipeline shipping economies" and a historically low supply of diesel reserves.
"Poor pipeline shipping economics and historically low diesel inventories are combining to cause shortages in various markets throughout the Southeast," the company said.
"These have been occurring sporadically, with areas like Tennessee seeing particularly acute challenges."
States expected to experience serious affects of the shortage include Maryland, Virginia, Alabama, Georgia, Tennessee, North Carolina and South Carolina.
The Biden administration says it is keeping a close watch on diesel inventories and working to boost supplies following news that reserves have been depleted and could run out in less than a month if not replenished, sparking fears of shortages and rising prices.
The Energy Information Administration (EIA) reported this week that, as of Oct. 14, the U.S. had only 25 days of reserve diesel supply, a low not seen since 2008.
National Economic Council Director Brian Deese acknowledged to Bloomberg that the level is "unacceptably low," and "all options are on the table" to address the situation.
"Because conditions are rapidly devolving and market economics are changing significantly each day, Mansfield is moving to Alert Level 4 to address market volatility," Mansfield's press statement said.
The company continued, "Mansfield is also moving the Southeast to Code Red, requesting 72 hour notice for deliveries when possible to ensure fuel and freight can be secured at economical levels."
The Northeast Home Heating Oil Reserve (NEHHOR) holds roughly 1 million barrels of home heating oil, and House Democrats from New England are asking President Biden to release some of those reserves to help reduce home heating prices in the region leading into the winter months.
But experts say the developing home heating oil shortage is not going away anytime soon.
FOX Business' Breck Dumas contributed to this report.
https://www.msn.com/en-us/money/markets ... 3e92cda81b
"Fuel company issues diesel shortage warning, says conditions 'rapidly devolving'"
Timothy Nerozzi
29 OCTOBER 2022
A major fuel supply and logistics company is raising a red flag on upcoming diesel fuel shortages.
Mansfield Energy issued the alert Friday stating there was a developing diesel fuel shortage in the southeastern region of the United States.
The company speculated that the shortage could be generated from "poor pipeline shipping economies" and a historically low supply of diesel reserves.
"Poor pipeline shipping economics and historically low diesel inventories are combining to cause shortages in various markets throughout the Southeast," the company said.
"These have been occurring sporadically, with areas like Tennessee seeing particularly acute challenges."
States expected to experience serious affects of the shortage include Maryland, Virginia, Alabama, Georgia, Tennessee, North Carolina and South Carolina.
The Biden administration says it is keeping a close watch on diesel inventories and working to boost supplies following news that reserves have been depleted and could run out in less than a month if not replenished, sparking fears of shortages and rising prices.
The Energy Information Administration (EIA) reported this week that, as of Oct. 14, the U.S. had only 25 days of reserve diesel supply, a low not seen since 2008.
National Economic Council Director Brian Deese acknowledged to Bloomberg that the level is "unacceptably low," and "all options are on the table" to address the situation.
"Because conditions are rapidly devolving and market economics are changing significantly each day, Mansfield is moving to Alert Level 4 to address market volatility," Mansfield's press statement said.
The company continued, "Mansfield is also moving the Southeast to Code Red, requesting 72 hour notice for deliveries when possible to ensure fuel and freight can be secured at economical levels."
The Northeast Home Heating Oil Reserve (NEHHOR) holds roughly 1 million barrels of home heating oil, and House Democrats from New England are asking President Biden to release some of those reserves to help reduce home heating prices in the region leading into the winter months.
But experts say the developing home heating oil shortage is not going away anytime soon.
FOX Business' Breck Dumas contributed to this report.
https://www.msn.com/en-us/money/markets ... 3e92cda81b
Re: OIL, NATURAL GAS
RIGZONE
"Oil Posts Monthly Gain"
by Bloomberg | Julia Fanzeres
Monday, October 31, 2022
Oil posted its first monthly gain in four months, propelled forward by the biggest output cut by OPEC+ since the pandemic, tightening global supplies in an already strained market.
West Texas Intermediate futures fell during the session to settle near $86 a barrel but posted an 8.9% monthly gain in October.
OPEC+ said it would curb production by 2 million barrels a day from November, complicating an already uncertain period for oil supply with the European Union set to implement sanctions on Russia in December.
Crude’s rally was capped by headwinds that continue to come out of China.
Earlier on Monday, Chinese government figures showed factory and services activity contracted in October.
The nation’s Covid Zero policy and an ongoing slump in the property market have weighed heavily on the nation’s economy this year.
Vitol Group, the world’s biggest independent oil trader, also noted the company is seeing signs of oil demand destruction.
Oil has shed a about a quarter of its value since June as concerns over a global economic slowdown and tight monetary policy threatened to curtail demand.
Investors will be watching interest-rate decisions from central banks including the Federal Reserve this week.
The dollar has retreated from a record high even as the Fed kept hiking rates to tame inflation, aiding crude as it makes commodities priced in the currency cheaper for most buyers.
“It remains painful, it remains difficult for many countries” after the surge in energy prices earlier this year, Vitol’s Chief Executive Officer Russell Hardy said in an interview with Bloomberg Television in Abu Dhabi on Monday.
“As a result, we’re going to continue to see demand destruction for another few months.”
Prices:
WTI for December delivery fell $1.37 to settle at $86.53 in New York.
Brent for December settlement, which expires on Monday, dropped 94 cents to $94.83 a barrel.
The more active January contract fell 96 cents to settle at $92.81.
Monday is the first day of the Adipec oil and gas conference in Abu Dhabi.
Eni SpA Chief Executive Officer Claudio Descalzi warned that Europe will have to rely on the US to make up for the loss of Russian oil supplies from next year.
At the same time, President Joe Biden’s energy envoy said current US investment in new energy supply is not adequate.
Meanwhile, OPEC held firm to projections that global oil demand will keep growing for another decade, and said it would be dangerous to abandon fossil fuels.
World oil consumption will climb by 13% to reach 109.5 million barrels a day in 2035 and hold around this level for another decade, the Organization of Petroleum Exporting Countries said in its annual World Oil Outlook.
https://www.rigzone.com/news/wire/oil_p ... 4-article/
"Oil Posts Monthly Gain"
by Bloomberg | Julia Fanzeres
Monday, October 31, 2022
Oil posted its first monthly gain in four months, propelled forward by the biggest output cut by OPEC+ since the pandemic, tightening global supplies in an already strained market.
West Texas Intermediate futures fell during the session to settle near $86 a barrel but posted an 8.9% monthly gain in October.
OPEC+ said it would curb production by 2 million barrels a day from November, complicating an already uncertain period for oil supply with the European Union set to implement sanctions on Russia in December.
Crude’s rally was capped by headwinds that continue to come out of China.
Earlier on Monday, Chinese government figures showed factory and services activity contracted in October.
The nation’s Covid Zero policy and an ongoing slump in the property market have weighed heavily on the nation’s economy this year.
Vitol Group, the world’s biggest independent oil trader, also noted the company is seeing signs of oil demand destruction.
Oil has shed a about a quarter of its value since June as concerns over a global economic slowdown and tight monetary policy threatened to curtail demand.
Investors will be watching interest-rate decisions from central banks including the Federal Reserve this week.
The dollar has retreated from a record high even as the Fed kept hiking rates to tame inflation, aiding crude as it makes commodities priced in the currency cheaper for most buyers.
“It remains painful, it remains difficult for many countries” after the surge in energy prices earlier this year, Vitol’s Chief Executive Officer Russell Hardy said in an interview with Bloomberg Television in Abu Dhabi on Monday.
“As a result, we’re going to continue to see demand destruction for another few months.”
Prices:
WTI for December delivery fell $1.37 to settle at $86.53 in New York.
Brent for December settlement, which expires on Monday, dropped 94 cents to $94.83 a barrel.
The more active January contract fell 96 cents to settle at $92.81.
Monday is the first day of the Adipec oil and gas conference in Abu Dhabi.
Eni SpA Chief Executive Officer Claudio Descalzi warned that Europe will have to rely on the US to make up for the loss of Russian oil supplies from next year.
At the same time, President Joe Biden’s energy envoy said current US investment in new energy supply is not adequate.
Meanwhile, OPEC held firm to projections that global oil demand will keep growing for another decade, and said it would be dangerous to abandon fossil fuels.
World oil consumption will climb by 13% to reach 109.5 million barrels a day in 2035 and hold around this level for another decade, the Organization of Petroleum Exporting Countries said in its annual World Oil Outlook.
https://www.rigzone.com/news/wire/oil_p ... 4-article/
Re: OIL, NATURAL GAS
REUTERS
"Biden calls on oil, gas companies to stop 'war profiteering,' threatens windfall tax"
Reuters
October 31, 2022
WASHINGTON, Oct 31 (Reuters) - U.S. President Joe Biden on Monday called on oil and gas companies to use their record profits to lower costs for Americans and increase production, or pay a higher tax rate, as he battles high pump prices with elections coming in a week.
In remarks at the White House, Biden criticized major oil companies who are bringing in big profits while Americans, weary of inflation, pay a tidy sum to fill up their cars.
The oil industry “has not met its commitment to invest in America and support the American people,” he said.
They’re not just making a “fair return” he said, they’re making “profits so high it is hard to believe,” Biden said.
“Their profits are a windfall of war,” he said, of the conflict that is ravaging Ukraine, and they have a responsibility to act.
“I think it’s outrageous,” he said.
If they passed those profits on to consumers, gasoline prices would be down about 50 cents, he said.
“If they don’t, they’re going to pay a higher tax on their excess profits, and face other restrictions,” he said.
The White House will work with Congress to look at these options and others.
“It’s time for these companies to stop war profiteering.”
Biden said oil and gas companies should invest their profits in lowering costs for Americans and increasing production and that if they do not, he will urge Congress to consider requiring oil companies to pay tax penalties and face other restrictions.
The president held the event with a week to go until Americans decide whether his Democrats will remain in control of the U.S. Congress.
Republicans are favored to take command of the House of Representatives, while the Senate is viewed as a toss-up.
Global energy giants including Exxon Mobil Corp and Chevron Corp posted another round of huge quarterly profits, benefiting from surging natural gas and fuel prices that have boosted inflation around the world and led to fresh calls to further tax the sector.
Whether Democrats or Republicans take control of Congress, passing a law taxing energy companies for excess profits would likely be difficult, energy experts believe.
The White House for months has been considering congressional proposals that could tax oil and gas producers' profits as consumers struggling with higher energy prices.
British lawmakers in July approved a 25% windfall tax on oil and gas producers in the British North Sea that was expected to raise 5 billion pounds ($5.95 billion) in one year to help people struggling with soaring energy bills.
Reporting by Steve Holland, Andrea Shalal and Katherine Jackson; Writing by Steve Holland; Editing by Caitlin Webber, Heather Timmons and Marguerita Choy
https://www.reuters.com/business/energy ... 022-10-31/
"Biden calls on oil, gas companies to stop 'war profiteering,' threatens windfall tax"
Reuters
October 31, 2022
WASHINGTON, Oct 31 (Reuters) - U.S. President Joe Biden on Monday called on oil and gas companies to use their record profits to lower costs for Americans and increase production, or pay a higher tax rate, as he battles high pump prices with elections coming in a week.
In remarks at the White House, Biden criticized major oil companies who are bringing in big profits while Americans, weary of inflation, pay a tidy sum to fill up their cars.
The oil industry “has not met its commitment to invest in America and support the American people,” he said.
They’re not just making a “fair return” he said, they’re making “profits so high it is hard to believe,” Biden said.
“Their profits are a windfall of war,” he said, of the conflict that is ravaging Ukraine, and they have a responsibility to act.
“I think it’s outrageous,” he said.
If they passed those profits on to consumers, gasoline prices would be down about 50 cents, he said.
“If they don’t, they’re going to pay a higher tax on their excess profits, and face other restrictions,” he said.
The White House will work with Congress to look at these options and others.
“It’s time for these companies to stop war profiteering.”
Biden said oil and gas companies should invest their profits in lowering costs for Americans and increasing production and that if they do not, he will urge Congress to consider requiring oil companies to pay tax penalties and face other restrictions.
The president held the event with a week to go until Americans decide whether his Democrats will remain in control of the U.S. Congress.
Republicans are favored to take command of the House of Representatives, while the Senate is viewed as a toss-up.
Global energy giants including Exxon Mobil Corp and Chevron Corp posted another round of huge quarterly profits, benefiting from surging natural gas and fuel prices that have boosted inflation around the world and led to fresh calls to further tax the sector.
Whether Democrats or Republicans take control of Congress, passing a law taxing energy companies for excess profits would likely be difficult, energy experts believe.
The White House for months has been considering congressional proposals that could tax oil and gas producers' profits as consumers struggling with higher energy prices.
British lawmakers in July approved a 25% windfall tax on oil and gas producers in the British North Sea that was expected to raise 5 billion pounds ($5.95 billion) in one year to help people struggling with soaring energy bills.
Reporting by Steve Holland, Andrea Shalal and Katherine Jackson; Writing by Steve Holland; Editing by Caitlin Webber, Heather Timmons and Marguerita Choy
https://www.reuters.com/business/energy ... 022-10-31/
Re: OIL, NATURAL GAS
THE HILL
"Seriously low diesel supply threatens to worsen inflation"
Rachel Frazin
30 OCTOBER 2022
A seriously low U.S. and global diesel supply is likely to drive up fuel costs and worsen inflation, raising concerns as the cold weather months approach.
“The national numbers for distillates are pretty tight,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
“It’s uncomfortable."
"That doesn’t mean that you’re going to see widespread outages, but if we get a bout of cold weather, things could be challenging.”
Analysts say that a confluence of factors, long bubbling beneath the surface, are now coming to a head as colder temperatures bring more seasonal demand for diesel, a fuel that powers trucks and buses and is also used in heating.
“This is the start of heating oil season."
"This is when demand really starts picking up as we enter the winter months,” said Debnil Chowdhury, the head of North and Latin American refining and marketing research at S&P Global Commodity Insights.
The country has about 25 days worth of diesel left, a level that’s considered very low.
De Haan said that normally, the country’s supply is closer to the “low to mid 30s” in terms of the number of days remaining.
Much of the country’s attention has been focused on gasoline prices, which have fluctuated throughout the year.
They have generally fallen in recent months following a peak of $5 per gallon in June.
Gasoline and diesel are products made from oil, and oil prices soared after Russia’s invasion of Ukraine.
A confluence of factors has also strained diesel markets.
These factors include reduced refining capacity due to the pandemic, increased demand amid COVID-19 recovery and Chinese export quotas, Chowdhury said.
“Diesel demand came back a lot faster than other products."
"There are refineries that shut down across the globe so the ability to supply was hindered,” he said.
“And then finally, China, which is a larger diesel exporter … wasn’t able to export.”
“All of those things combined led the world to really have low inventory,” he added, also mentioning a recent increase in demand for jet fuel, which may have to compete with diesel at the refinery.
He added that the response to Russia’s invasion of Ukraine has also played a role in rerouting trade of the fuel as many European countries avoid Russian products, creating market inefficiencies.
In addition to the long-term refinery closures, De Haan also highlighted some recent outages in the Midwest.
“The refinery fire in Northwest Indiana and now the … shutdown of BP’s Toledo refinery, those are refineries that produce a lot of diesel fuel because they process a lot of heavy Canadian oil, so that is not helping the situation at all,” he said.
Analysts say that this crunch is expected to worsen persistently high inflation not seen in the last four decades.
High diesel prices may drive up shipping and heating costs.
“The rising costs of diesel fuel therefore impacts everybody, as diesel prices affect direct manufacturing, transportation and heating costs."
"As diesel prices rise, so do the costs of goods which in general are passed onto consumers,” said Suzanne Danforth, an analyst with Wood Mackenzie, in a written statement to The Hill.
Danforth added that this could also help push the country into recession, as rising prices could curb demand for products.
“Higher diesel prices have the potential to create even stronger inflationary pressures especially if the current price spike is sustained, adding significant downside risk to demand and increasing the chances of a global recession,” she said.
However, she also noted that if the economy slows, that could also help bring diesel prices down.
But the impacts of heating costs may not impact Americans evenly.
Heating oil is most commonly used in the Northeast, and that region may be hit hardest by large utility bills.
The Biden administration for its part has sought to put pressure on industry to increase the supply of diesel.
In a recent interview with Bloomberg, National Economic Council Director Brian Deese called the inventory levels “unacceptably low” and called on industry to build up its inventory.
Energy Secretary Jennifer Granholm called on industry to cut back its exports of “refined products” which include diesel and gasoline, in recent weeks, arguing that the supply is needed stateside.
The industry, however, has pushed back, arguing that exports are important for maintaining global supplies, especially amid disruptions caused by the conflict in Ukraine.
“Reducing global supply by limiting U.S. exports to build region-specific inventory will only aggravate the global supply shortfall,” ExxonMobil’s CEO reportedly wrote to the Biden administration last month.
Overall, Chowdhury said, there’s limited options to fix the problem.
“This is a difficult crisis to get out of,” he said.
https://www.msn.com/en-us/news/politics ... 0083ab4317
"Seriously low diesel supply threatens to worsen inflation"
Rachel Frazin
30 OCTOBER 2022
A seriously low U.S. and global diesel supply is likely to drive up fuel costs and worsen inflation, raising concerns as the cold weather months approach.
“The national numbers for distillates are pretty tight,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
“It’s uncomfortable."
"That doesn’t mean that you’re going to see widespread outages, but if we get a bout of cold weather, things could be challenging.”
Analysts say that a confluence of factors, long bubbling beneath the surface, are now coming to a head as colder temperatures bring more seasonal demand for diesel, a fuel that powers trucks and buses and is also used in heating.
“This is the start of heating oil season."
"This is when demand really starts picking up as we enter the winter months,” said Debnil Chowdhury, the head of North and Latin American refining and marketing research at S&P Global Commodity Insights.
The country has about 25 days worth of diesel left, a level that’s considered very low.
De Haan said that normally, the country’s supply is closer to the “low to mid 30s” in terms of the number of days remaining.
Much of the country’s attention has been focused on gasoline prices, which have fluctuated throughout the year.
They have generally fallen in recent months following a peak of $5 per gallon in June.
Gasoline and diesel are products made from oil, and oil prices soared after Russia’s invasion of Ukraine.
A confluence of factors has also strained diesel markets.
These factors include reduced refining capacity due to the pandemic, increased demand amid COVID-19 recovery and Chinese export quotas, Chowdhury said.
“Diesel demand came back a lot faster than other products."
"There are refineries that shut down across the globe so the ability to supply was hindered,” he said.
“And then finally, China, which is a larger diesel exporter … wasn’t able to export.”
“All of those things combined led the world to really have low inventory,” he added, also mentioning a recent increase in demand for jet fuel, which may have to compete with diesel at the refinery.
He added that the response to Russia’s invasion of Ukraine has also played a role in rerouting trade of the fuel as many European countries avoid Russian products, creating market inefficiencies.
In addition to the long-term refinery closures, De Haan also highlighted some recent outages in the Midwest.
“The refinery fire in Northwest Indiana and now the … shutdown of BP’s Toledo refinery, those are refineries that produce a lot of diesel fuel because they process a lot of heavy Canadian oil, so that is not helping the situation at all,” he said.
Analysts say that this crunch is expected to worsen persistently high inflation not seen in the last four decades.
High diesel prices may drive up shipping and heating costs.
“The rising costs of diesel fuel therefore impacts everybody, as diesel prices affect direct manufacturing, transportation and heating costs."
"As diesel prices rise, so do the costs of goods which in general are passed onto consumers,” said Suzanne Danforth, an analyst with Wood Mackenzie, in a written statement to The Hill.
Danforth added that this could also help push the country into recession, as rising prices could curb demand for products.
“Higher diesel prices have the potential to create even stronger inflationary pressures especially if the current price spike is sustained, adding significant downside risk to demand and increasing the chances of a global recession,” she said.
However, she also noted that if the economy slows, that could also help bring diesel prices down.
But the impacts of heating costs may not impact Americans evenly.
Heating oil is most commonly used in the Northeast, and that region may be hit hardest by large utility bills.
The Biden administration for its part has sought to put pressure on industry to increase the supply of diesel.
In a recent interview with Bloomberg, National Economic Council Director Brian Deese called the inventory levels “unacceptably low” and called on industry to build up its inventory.
Energy Secretary Jennifer Granholm called on industry to cut back its exports of “refined products” which include diesel and gasoline, in recent weeks, arguing that the supply is needed stateside.
The industry, however, has pushed back, arguing that exports are important for maintaining global supplies, especially amid disruptions caused by the conflict in Ukraine.
“Reducing global supply by limiting U.S. exports to build region-specific inventory will only aggravate the global supply shortfall,” ExxonMobil’s CEO reportedly wrote to the Biden administration last month.
Overall, Chowdhury said, there’s limited options to fix the problem.
“This is a difficult crisis to get out of,” he said.
https://www.msn.com/en-us/news/politics ... 0083ab4317
Re: OIL, NATURAL GAS
RIGZONE
"Oil Rises on Premise of China Lifting Covid Restrictions"
by Bloomberg | Alex Longley and Julia Fanzeres
Tuesday, November 01, 2022
Oil gained on speculation that China is preparing to gradually exit the country’s Covid-Zero policy.
West Texas Intermediate futures rose 2.1% to settle above $88 a barrel after losing ground in the previous two sessions.
Oil followed global stock markets higher after an unverified social media post triggered speculation Beijing is looking to phase out Covid restrictions -- despite the country’s Foreign Ministry saying it was unaware of such a plan.
A weakening dollar also supported prices, with commodities priced in the currency more attractive to buyers.
“Potential changes to China’s Covid policy -- real or speculated -- will create volatility in crude trading,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management.
But she cautioned that if “investors did think that China was changing their COVID policy, the move higher would be much more significant.”
While oil is down by almost a third since early June, futures ended October higher in the first monthly gain since May -- buoyed by the OPEC+ output cut agreement.
The group’s Secretary-General Haitham Al Ghais said Monday the cuts were necessary because economic uncertainty would lead to excess supplies.
But the supply outlook is clouded by impending European Union sanctions on Russian crude flows set to take effect from Dec. 5.
Prices:
WTI for December delivery rose $1.84 to settle at $88.37 in New York.
Brent for January settlement gained $1.84 to settle at $94.65.
“We’re in a tale of two markets,” Joe McMonigle, the International Energy Forum’s secretary-general, told Bloomberg TV at the Adipec conference in Abu Dhabi.
“The physical markets are very tight."
"The paper markets are pricing in bad economic news and a bad recession.”
https://www.rigzone.com/news/wire/oil_r ... 8-article/
"Oil Rises on Premise of China Lifting Covid Restrictions"
by Bloomberg | Alex Longley and Julia Fanzeres
Tuesday, November 01, 2022
Oil gained on speculation that China is preparing to gradually exit the country’s Covid-Zero policy.
West Texas Intermediate futures rose 2.1% to settle above $88 a barrel after losing ground in the previous two sessions.
Oil followed global stock markets higher after an unverified social media post triggered speculation Beijing is looking to phase out Covid restrictions -- despite the country’s Foreign Ministry saying it was unaware of such a plan.
A weakening dollar also supported prices, with commodities priced in the currency more attractive to buyers.
“Potential changes to China’s Covid policy -- real or speculated -- will create volatility in crude trading,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management.
But she cautioned that if “investors did think that China was changing their COVID policy, the move higher would be much more significant.”
While oil is down by almost a third since early June, futures ended October higher in the first monthly gain since May -- buoyed by the OPEC+ output cut agreement.
The group’s Secretary-General Haitham Al Ghais said Monday the cuts were necessary because economic uncertainty would lead to excess supplies.
But the supply outlook is clouded by impending European Union sanctions on Russian crude flows set to take effect from Dec. 5.
Prices:
WTI for December delivery rose $1.84 to settle at $88.37 in New York.
Brent for January settlement gained $1.84 to settle at $94.65.
“We’re in a tale of two markets,” Joe McMonigle, the International Energy Forum’s secretary-general, told Bloomberg TV at the Adipec conference in Abu Dhabi.
“The physical markets are very tight."
"The paper markets are pricing in bad economic news and a bad recession.”
https://www.rigzone.com/news/wire/oil_r ... 8-article/
Re: OIL, NATURAL GAS
Investing.com
"Oil Inventories Fall by More Than Expected 6.5M Barrels Last Week: API"
By Yasin Ebrahim
Nov 01, 2022
Investing.com -- U.S. crude stockpiles fell by much more than expected last week, the API reported Tuesday, just as hopes of a China-fueled recovery in demand gather pace.
Crude Oil WTI Futures, the U.S. benchmark, traded at $88.41 a barrel following the report after settling up 2.1% at $88.37 per barrel.
U.S. crude inventories decreased by 6.5 million barrels for the week ended Oct. 28, the API reported, compared with estimates for a rise of 267,000 barrels, and a build of 4.5 million barrels reported in the previous week.
The API data also showed that gasoline inventories fell 2.6 million barrels last week, while distillate stocks increased by 865,000 barrels.
Sentiment on oil prices has improved amid fresh hopes that China could drop its Covid-zero policy, potentially boosting travel and energy demand.
China, however, denied the rumors, with foreign ministry spokesman Zhao Lijian saying he was “not aware" of plans to wind down Covid restrictions.
The official government inventory report due Wednesday is expected to show weekly U.S. crude supplies rose by 367,000 barrels last week.
https://www.investing.com/news/commodit ... pi-2928509
"Oil Inventories Fall by More Than Expected 6.5M Barrels Last Week: API"
By Yasin Ebrahim
Nov 01, 2022
Investing.com -- U.S. crude stockpiles fell by much more than expected last week, the API reported Tuesday, just as hopes of a China-fueled recovery in demand gather pace.
Crude Oil WTI Futures, the U.S. benchmark, traded at $88.41 a barrel following the report after settling up 2.1% at $88.37 per barrel.
U.S. crude inventories decreased by 6.5 million barrels for the week ended Oct. 28, the API reported, compared with estimates for a rise of 267,000 barrels, and a build of 4.5 million barrels reported in the previous week.
The API data also showed that gasoline inventories fell 2.6 million barrels last week, while distillate stocks increased by 865,000 barrels.
Sentiment on oil prices has improved amid fresh hopes that China could drop its Covid-zero policy, potentially boosting travel and energy demand.
China, however, denied the rumors, with foreign ministry spokesman Zhao Lijian saying he was “not aware" of plans to wind down Covid restrictions.
The official government inventory report due Wednesday is expected to show weekly U.S. crude supplies rose by 367,000 barrels last week.
https://www.investing.com/news/commodit ... pi-2928509
Re: OIL, NATURAL GAS
RIGZONE
"Oil Rallies on Tight Fuel Supplies"
by Bloomberg | Julia Fanzeres
Wednesday, November 02, 2022
Oil rose as fuel stockpiles continue to tighten, clinging to gains even as hawkish comments from Federal Reserve Chairman Jerome Powell knocked the wind out of Wall Street.
West Texas Intermediate settled at a three-week high of $90 a barrel on Wednesday.
Tight supplies rallied crude prices as gasoline inventories tumbled to the lowest since November 2014 and distillate inventories on the East Coast refused to budge from record seasonal lows, according to Energy Information Administration data.
Crude held onto gains as the US central bank increased interest rates by 75 basis points.
Powell’s comments that “we still have some ways” before rates are tight enough reversed Wall’s Street’s earlier rise.
“We may slow down, but we’re probably going further,” is the basic takeaway from the Fed’s statement and Powell’s press conference, said Adam Crisafulli, founder of VitalKnowledge.
“The Fed is hinting at a slower pace of tightening, but Powell was very explicit about rates going to a higher level than previously anticipated.”
Crude recently clocked its first monthly gain in five months, advancing toward $90 after the decision by the OPEC+ alliance to slash production starting in November.
Prices had fallen off of war-driven peaks as economists forecast a recession for many of the world’s economies as central banks hike rates to combat inflation and slow down growth.
However, as the deadline approaches for Russian oil bans to take effect, supply fears are once again coming to the market’s fore.
Oil options markets have turned steadily more bullish in recent weeks.
Premiums of bullish call options over bearish puts have climbed to the highest level since June, according to data compiled by Bloomberg.
Prices:
WTI for December delivery rose $1.63 to settle at $90 a barrel in New York.
Brent for January settlement increased $1.51 to settle at $96.16 a barrel.
https://www.rigzone.com/news/wire/oil_r ... 1-article/
"Oil Rallies on Tight Fuel Supplies"
by Bloomberg | Julia Fanzeres
Wednesday, November 02, 2022
Oil rose as fuel stockpiles continue to tighten, clinging to gains even as hawkish comments from Federal Reserve Chairman Jerome Powell knocked the wind out of Wall Street.
West Texas Intermediate settled at a three-week high of $90 a barrel on Wednesday.
Tight supplies rallied crude prices as gasoline inventories tumbled to the lowest since November 2014 and distillate inventories on the East Coast refused to budge from record seasonal lows, according to Energy Information Administration data.
Crude held onto gains as the US central bank increased interest rates by 75 basis points.
Powell’s comments that “we still have some ways” before rates are tight enough reversed Wall’s Street’s earlier rise.
“We may slow down, but we’re probably going further,” is the basic takeaway from the Fed’s statement and Powell’s press conference, said Adam Crisafulli, founder of VitalKnowledge.
“The Fed is hinting at a slower pace of tightening, but Powell was very explicit about rates going to a higher level than previously anticipated.”
Crude recently clocked its first monthly gain in five months, advancing toward $90 after the decision by the OPEC+ alliance to slash production starting in November.
Prices had fallen off of war-driven peaks as economists forecast a recession for many of the world’s economies as central banks hike rates to combat inflation and slow down growth.
However, as the deadline approaches for Russian oil bans to take effect, supply fears are once again coming to the market’s fore.
Oil options markets have turned steadily more bullish in recent weeks.
Premiums of bullish call options over bearish puts have climbed to the highest level since June, according to data compiled by Bloomberg.
Prices:
WTI for December delivery rose $1.63 to settle at $90 a barrel in New York.
Brent for January settlement increased $1.51 to settle at $96.16 a barrel.
https://www.rigzone.com/news/wire/oil_r ... 1-article/