Refinery Maintenance Season Underway
After mild losses yesterday, oil prices are heading higher this morning as markets continue worrying about Iran sanctions. Crude is currently trading at $72.04, up 47 cents.
Fuel prices are also heading higher this morning. Diesel prices are trading near multi-year highs at $2.3086 after picking up 0.9 cents. Gasoline prices are $2.0632, up 0.5 cents.
Markets are getting antsy looking towards Iran sanctions as we approach the November 1 effective date. Yesterday, Energy Secretary Perry announced the US would not use the Strategic Petroleum Reserve to offset lost supply, removing one possible source of relief. Markets are also speculating that India’s imports from Iran could drop to zero by November, though that won’t be verifiable until late October.
EIA Data
Yesterday brought a slightly bearish EIA report, though somewhat less so than the API’s data. While markets were expecting crude stocks to fall slightly last week, the EIA showed a moderate crude build of 1.8 million barrels. Gasoline also showed a build, while diesel posted a surprise draw. Cushing, OK, the delivery point for WTI crude, saw a half million barrel build as well, which is bearish for prices.
Fall maintenance season for refineries appears to be hitting its stride. Refinery utilization fell 5% to 90.4% this past week, which a large portion of that occurring in PADD 2 (Chicago/Midwest region). Today only the West Coast has utilization above 95%, all other regions have seen declining refinery activity.
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