2015 OUTLOOK - opisnet.com · Crudeoil extremeswon’tapproachthe $55/bbl(gap between low and high)...
11
2015 OUTLOOK SOME TRENDS TO WATCH FOR IN 2015 • Gasoline volatility has returned and will stay for a while. Crude oil extremes won’t approach the $55/bbl (gap between low and high) variances of 2014, but regional gasoline markets could see $1/gal separate annual lows and highs. • OPIS expects that the broad national average gasoline price for 2015 (over all 365 days) will fall between $2.349/gal and $2.449/gal. That assessment takes into consideration the additional California cost tied to cap-and-trade as well as a few state tax levies that arrive in January. The projection does not account for any increase in the federal excise tax, and we do suspect that an initiative to raise that levy could gain traction in 2015. • The annual gasoline average may range from just below $2.00/gal to as much as $2.75/gal thanks to the vagaries of just-in-time inventory practices; winter and spring refinery maintenance schedules; and the usual disruptions that occur with refining equipment, whether tied to nature or structural decay. • U.S. crude oil inventories will surpass the contemporary commercial storage record of 399.4 million bbl established in spring 2014, with supplies perhaps swelling to 420 million bbl or higher. Finished gasoline stocks will also bulge, perhaps flirting with 240 million bbl ahead of the driving season. However, the 1990 high water mark of 251 million bbl of gasoline should remain out of reach. • The Jones Act, which restricts waterborne petroleum traffic between stateside ports to U.S. flagged vessels, will remain intact with no significant alterations. Waivers will be strictly limited to events brought about by hurricanes or natural disasters. • California gasoline prices will become disconnected to the rest of the U.S. mainland. Indeed, other than Hawaii and perhaps Alaska, the Golden State is the only location that might see a brief pass at $4/gal numbers. Any such number will represent an unsustainable spike tied to temporary PADD5 refining issues. We expect that a number of less than $3/gal in California is more realistic as an annual average, but the state remains prone to extreme, albeit fleeting, price events. • The 1970 record level of U.S. crude oil production (just over 10 million b/d) will survive the year but U.S. output will increase and be maintained at the highest daily output level since 1973. • NYMEX gasoline and ULSD futures will once again represent the “strongest link” in the U.S. supply chain. Midwestern markets will see diesel occasionally trade at 10% to 15% premiums to futures markets, but most spot markets will see all grades of distillate fetch a discount to ULSD futures quotes. The cheapest prices in the country will come via coastal world-class refineries in Texas and Louisiana. • The relationship between ethanol and gasoline will wander through terrible correlations. Consider that at one point in 2014, Chicago ethanol commanded an 83cts/gal price premium above front month NYMEX RBOB and at another point, the alcohol sold at a $1.08/gal discount to RBOB. Downstream points for ethanol delivery could potentially find huge premiums to downstream gasoline costs in 2015, although we doubt whether winter and spring rail issues will be as challenging as during the 2013-2014 winter. • The U.S. crude oil export ban (prohibiting crude exports beyond Canada, Mexico, and the occasional Alaskan cargo to the Far East) will not be lifted in 2015, but the issue will continue to be hotly debated in Washington. • Sales of E15 will rise from 2014 levels, but the increase will be negligible. Questionable blending economics as well as a lack of auto vehicle liability waivers will keep this product on the fringe, rather than the mainstream, of U.S. fuel markets. • The first ground-up new U.S. refinery will begin contributing some 7,000 b/d of diesel to North Dakota industry in the first half of 2015. The Dakota Prairie refinery in southwestern North Dakota will process 20,000 b/d of Bakken crude oil. • Wholesale and retail gasoline distribution will continue to be high on Wall Street’s appreciation list, with dozens of additional chains acquired by existing Master Limited Partnerships or MLP “wannabes”. • Several refiners, including at least one multinational, will look to add critical mass, as well as secure guaranteed demand in the form of long term distributor contracts or even via aggressive purchases of existing MLPs. Refiners will return to the list as buyers when retail chains are made available. • Uncertainty about crude costs, carbon legislation, and the future of light products demand will limit mergers and acquisitions activity, but we expect the sale of multiple California properties in 2015, as well as perhaps one refinery east of the Rockies. • Refiners will largely eschew popular spot-sourced deals with distributors, thanks mostly to the lure of optimizing merchant bulk sales in the highest priced markets. Pipeline space fees will become a customary line item for 2015 formulae deals on gasoline and diesel, and the higher costs will breed controversy. • Brisk gasoline demand growth will be overhyped in early 2015, with many so-called analysts projecting unrealistic consumption increases. Changing demographics and the progression of tough CAFE standards will keep domestic demand growth in check.
Transcript of 2015 OUTLOOK - opisnet.com · Crudeoil extremeswon’tapproachthe $55/bbl(gap between low and high)...
2015 OUTLOOKSOME TRENDS TO WATCH FOR IN 2015•Gasoline volatility has returned andwill stay for awhile.Crudeoilextremeswon’tapproachthe$55/bbl(gapbetweenlow and high) variances of 2014, but regional gasolinemarketscouldsee$1/galseparateannuallowsandhighs.
•OPISexpectsthatthebroadnationalaveragegasolinepricefor2015(overall365days)willfallbetween$2.349/galand $2.449/gal.That assessment takes into considerationtheadditionalCaliforniacosttiedtocap-and-tradeaswellasafewstatetaxleviesthatarriveinJanuary.Theprojectiondoesnotaccountforanyincreaseinthefederalexcisetax,andwedosuspectthataninitiativetoraisethatlevycouldgaintractionin2015.
•Theannualgasolineaveragemayrangefromjustbelow$2.00/galtoasmuchas$2.75/galthankstothevagariesof just-in-time inventory practices; winter and springrefinerymaintenanceschedules;andtheusualdisruptionsthatoccurwithrefiningequipment,whethertiedtonatureorstructuraldecay.
•U.S. crude oil inventorieswill surpass the contemporarycommercialstoragerecordof399.4millionbblestablishedin spring 2014, with supplies perhaps swelling to 420million bbl or higher. Finished gasoline stocks will alsobulge,perhapsflirtingwith240millionbbl aheadof thedrivingseason.However,the1990highwatermarkof251millionbblofgasolineshouldremainoutofreach.
•The Jones Act, which restricts waterborne petroleumtraffic between stateside ports toU.S. flagged vessels,will remain intact with no significant alterations.Waiverswillbestrictlylimitedtoeventsbroughtaboutbyhurricanesornaturaldisasters.
•CaliforniagasolinepriceswillbecomedisconnectedtotherestoftheU.S.mainland.Indeed,otherthanHawaiiandperhapsAlaska, the Golden State is the only location that mightsee a brief pass at $4/gal numbers.Any such numberwillrepresent an unsustainable spike tied to temporary PADD5refiningissues.Weexpectthatanumberoflessthan$3/galinCaliforniaismorerealisticasanannualaverage,butthestateremainspronetoextreme,albeitfleeting,priceevents.
•The 1970 record level ofU.S. crude oil production (justover10millionb/d)willsurvivetheyearbutU.S.outputwillincreaseandbemaintainedatthehighestdailyoutputlevelsince1973.
•NYMEX gasoline and ULSD futures will once againrepresent the “strongest link” in the U.S. supply chain.Midwesternmarketswillseedieseloccasionallytradeat10%to15%premiumstofuturesmarkets,butmostspotmarketswill see all grades of distillate fetch a discount toULSDfuturesquotes.Thecheapestpricesinthecountrywillcomeviacoastalworld-classrefineriesinTexasandLouisiana.
•Therelationshipbetweenethanolandgasolinewillwanderthrough terrible correlations. Consider that at one pointin 2014,Chicago ethanol commanded an 83cts/gal pricepremiumabovefrontmonthNYMEXRBOBandatanotherpoint, thealcohol soldat a$1.08/galdiscount toRBOB.Downstreampointsforethanoldeliverycouldpotentiallyfindhugepremiumstodownstreamgasolinecostsin2015,althoughwe doubtwhetherwinter and spring rail issueswillbeaschallengingasduringthe2013-2014winter.
•TheU.S. crudeoil exportban (prohibitingcrudeexportsbeyondCanada,Mexico,andtheoccasionalAlaskancargototheFarEast)willnotbeliftedin2015,buttheissuewillcontinuetobehotlydebatedinWashington.
•SalesofE15will rise from2014 levels,but the increasewill be negligible. Questionable blending economics aswellasalackofautovehicleliabilitywaiverswillkeepthisproductonthefringe,ratherthanthemainstream,ofU.S.fuelmarkets.
•Thefirstground-upnewU.S.refinerywillbegincontributingsome7,000b/dofdieseltoNorthDakotaindustryinthefirsthalfof2015.TheDakotaPrairierefineryinsouthwesternNorthDakotawillprocess20,000b/dofBakkencrudeoil.
•Wholesale and retail gasoline distribution will continuetobehighonWallStreet’sappreciation list,withdozensofadditionalchainsacquiredbyexistingMasterLimitedPartnershipsorMLP“wannabes”.
•Severalrefiners,includingatleastonemultinational,willlooktoaddcriticalmass,aswellassecureguaranteeddemandintheformoflongtermdistributorcontractsorevenviaaggressivepurchasesofexistingMLPs.Refinerswillreturntothelistasbuyerswhenretailchainsaremadeavailable.
•Uncertaintyaboutcrudecosts,carbonlegislation,andthefuture of light products demand will limit mergers andacquisitions activity, but we expect the sale of multipleCalifornia properties in 2015, as well as perhaps onerefineryeastoftheRockies.
•Refiners will largely eschew popular spot-sourced dealswithdistributors, thanksmostly to the lureofoptimizingmerchantbulksalesinthehighestpricedmarkets.Pipelinespace fees will become a customary line item for 2015formulaedealsongasolineanddiesel,andthehighercostswillbreedcontroversy.
•Briskgasolinedemandgrowthwillbeoverhypedinearly2015,withmany so-calledanalystsprojectingunrealisticconsumption increases. Changing demographics and theprogressionoftoughCAFEstandardswillkeepdomesticdemandgrowthincheck.
2
2015 COULD BE A MOST VIOLENT YEAR FOR OIL, GASOLINE
ArtandlifeinthepetroleumbusinessintersectedwiththedebutofAMostViolentYearinlate2014,amoviethattellsthestoryofaNewYorkfuelsupplierwhomustdealwithviolence,corruption,anddecaythatthreatenthefamilybusiness.Thetitleappearstobeanappropriatemonikerforaforecastdealingwithoilsupplyanddemandparametersinthenexttwelvemonths.OPISseesthepotentialforplentyofviolenceinpricein2015;threatstobusinessesthatwereincrediblyprosperousfrom2011-2014;corruptionwithinOPECcountries thatshownodisposition towarddisciplineonexports,andperhapsdecayinthestandardaxiomthatlowpricesalwaysgivebirthtodemandbursts.
Thefirstsixmonthsof2014saw$100bblorhigherpricepointsforcrudeonaregularbasis,butthecenturymarkcannotbeviewedaspracticalorlikelyin2015.Evenapricelevelof$80bblseemssuggestiveofapriceceilingasopposedtothegroundfloorlevelthat$75-$90bblhasrepresentedsince2011.
TheNewYearbeganwiththeWTIandBrentfutures’benchmarksinthe$50’s,reflecting50percentorgreaterdeclinesfromspring2014highs.ItalsocommencedwithconsiderablefundmoneystillparkedinlongpositionsinWTIandRBOBfuturesandoptions.What’snotcleariswhetherthatmoneyisreflectiveofpatientconservativecapitalthatispartofthe21stcenturyarchitecturalmarketstructure,orwhethersomebigmoneyis“trapped”inamarketthatcouldstillspiralmuchlower.
Indeed,thatiswherethepotential“violence”risestofront-and-centerconsideration.Itisnolongerinconceivabletoconsideratleastmomentaryvisitsto$40bbloreven$30bblcrude.ThepossibilityofsuchnumberswasevenacknowledgedbySaudiOilMinisterAl-NaimiinaDecemberinterviewwiththeMiddleEastEconomicSurvey(MEES).TheSaudiminister,whomayberivaledbyonlyVladimirPutinasthemostpowerfulindividualinworldoilmarkets,clearlyindicatedthattheKingdomandalliedArabGulfcountrieswereintentonmaintainingmarketshare,observingthat“otherswillbeharmedgreatlybeforewefeelanypain.”
Mostoftheinvestmentbanksandotherglobalthinktanks,however,believethat2015willbefrontendloaded,whichistosaythattheiranalysissuggeststhathigherdemandinthesecondhalfoftheyearwillleadtoanoilpricerecovery.ManyofthesesameresearchersandpunditsincorrectlypredictedanOPECproductioncutattheNovember27meeting,andfewwanttothinkabouttheconsequencesofaworldwith$30barrelto$50barreloilinconsecutivecalendarquarters.
Ironically,lastspringbroughtdeclarationsfromsomeofthelargestinvestmenthousesthatsuggestedoilpricevolatilitywasdead,replacedbyanewnormalofnarrowpriceranges,particularlyfortheglobalbenchmark–Brent.
OPISseesahighlyvolatileandsomewhatviolentcrudeoillandscapein2015.It’ssomewhatsillytoprojectanaveragepriceforWTIorBrent,giventhelikelihoodthattherangeofpricesmightvaryfrombelow$40bbltoabove$70bbl.However,wedobelievethatcheappetroleumvalueswillprovideastimulusforNorthAmericanconsumptionthatwillmanifestitselfinyear-on-yearincreasesforgasolinedemandthisspringandsummer.Higherrefinedproducts’valuesshouldhelpcrudeoilpricesrecoverjustaboutthetimethatOPECisscheduledtomeet(withlowexpectations)inJune.Butunlikemanyofthebanks,weseethepotentialforanotherroundofsellingpressureinthelast100daysof2015,particularlyifOPECoptsforacontinuationofthe“sellwhatyoucan”strategythatprevailedthroughallof2014.
Whatdoesallofthismeanforthemarqueeproduct,U.S.regulargasoline?Again,OPISbelievesthatawiderangeofpricepointscouldprevailthroughthenexttwelvemonthswiththenationalaveragescrapingalowbelow$2galandahighofperhaps$2.75gal.Just-in-timeinventorypracticesshouldcontinuetocreatelocalized“spikes”andthegasolinemarketisforeversusceptibletoevent-inspiredincreases(hurricanes,earthquakes,poweroutages,refineryfires)thathavealwaysbeencapableofcreatingmomentaryboutsofpetronoia(awordcoinedbyanOPISeditorin1998).
OPISsuspectsthatregularunleadedgasolineatthepumpwillaveragebetween$2.349galand$2.449galin2015,withverycheapgasolinebookendingatypicalspring/earlysummerrally.Ifgasolinedemandaverages9-millionb/dthisyear,theapproximateaggregatecosttoU.S.consumersshouldfallbetween$338-billionand$345-billion,giveortaketenbillionorso.Thatwouldcomparetoa2014costofapproximately$461-billion,representingadiscretionaryincome“dividend”thatcouldtop$125-billionforconsumers.
3
The Crude Does Not Abide
Toomuchisalwaysmadeaboutthetwoprinciplebenchmarksforcrudeoil,WTIandBrent.ThesebenchmarkshavebeendisconnectedtomanyNorthAmericanblendssincethefirstArabSpring,andtheymaycontinuetobeapoorgaugeofactualpricesinthefieldsorstoragehubsin2015.LastyearendedwithanarrowingofthespreadbetweenWTIandBrentto$3bblto$4bbl,thanksmostlytoincrediblyaggressivetackofoffshoreproducersbothwithinandoutsideofOPEC.
2015beginswithpricepointsaslowas$40bblforheavyCaliforniacrude,andwiththeCanadianheavysourbenchmark(WesternCanadianSelectorWCS)valuedatjustover$32bbl.Insomecases,afewrefinershaveaccesstopricesrarelyseensince2005.NorthDakotaBakkencrudespentmuchofthelastquarterof2014tradingfora$5-$6bbldiscounttoWTIifbarrelswereprocuredattheClearlake,Minnesotatradinghub,butmuchwiderdiscountsprevailedinwesternNorthDakotafields,givingPacificNorthwesternrefinersachancetobeatoffshoreprices.AttheGulfCoast,benchmarkLightLouisianaSweet(LLS)crudefetcheda$2bblor$3bblpremiumtoWTI.
Inshort,theNewYearbeganwithNorthAmericancrudeoilpricesvaryingbetweenthemid-$30’sandmid-$50’s,orafewdollarsbelowoffshorelightsweetmaterial.U.S.refinersstillhadasignificantadvantageversusglobalprocessorsthankstocheapnaturalgas,andslightlycheapercrude,buttheadvantagewasaboutassmallasithasbeensinceinfouryears.TheexpectationisthatWTIwillcontinuetofetchadiscountof$5bblto$10bblversusBrentcrudeastheyearprogresses,withwiderspreadscommonduringrefineryturnaroundseason.
Crudeoilstocksstart2015atthehighestlevelevertoringinaNewYear,butallsignspointtoU.S.inventoriesbreakingallhistoricalrecordsforstoragebytheendofthefirstquarter,orearlyinthesecondquarter.Notwithstandingtheselikelystatisticaltargets,hugeprojectsthataddedpipelines,bulktanks,andlinefillinrecentyearscanaccommodateamuchhigherinventorythaninyear’spast.Headlinesmaytrumpetrecordinventories,butthesystemcaneasilyhandle410-millionto420-millionbblofcommercialcrudestorage,ifbuildsarenottiedtopipelinebottlenecks.
Despitethepricecarnagewitnessedinthelastsixmonthsof2014,anddespitetheprospectsforhigherinventoriesandlowerrefineryrunsinthefirstfewmonthsof2015,theinvestmentcommunityretainsaverysubstantialnetlongpositionincrudeoil.
NetlengthinWTIfuturesandoptionsended2014withabuyingskewofmorethan320,000contracts,representingahypotheticalpositionof320-millionbarrels.Despitebearishsentimentreadingsandtroublingheadlinesaboutoil,thatisthesecondhighestlongpositiononrecordtoendayear.Only2013sawalargerbuyingskew,withabout38,000additionallongs.Theoverallbreadthofthepaperpositionscontinuestobestunningwhencomparedtopreviousdecades.Longpositionsheldbylargenon-commercialfundstiltedcloseto425-millionbblatyear’send,comparedwitha466-millionbblpositionas2013turnedinto2014.
The U.S. Fuel Tab & Projected 2015 Gas Price Dividend
YearAverage Daily
Demand Millions B/D (EIA)
National Daily Average (OPIS)
Fuel Spending Per Day
Approximate Annual Cost
2009 8.997 $2.345 $886,114,530.000 $323.4 Billion
2010 8.993 $2.774 $1,047,756,444.000 $382.4 Billion
2011 8.753 $3.517 $1,292,940,642.000 $471.9 Billion
2012 8.682 $3.607 $1,315,270,908.000 $481.4 Billion
2013 8.843 $3.494 $1,297,692,564.000 $473.7 Billion
2014** 8.995 $3.340 $1,261,818,600.000 $460.6 Billion
2015* 9.070 $2.399 $913,875,060.000 $333.6 Billion
**2014 demand based on Jan-Oct monthly and Nov-Dec weekly EIA data*2015 forecasted
4
Theyear2014alsoprovidedrecordlevelsforoutrightcrudeoillengthaswellasnetlengthinthefundcategoryandnotsurprisingly, those recordswereestablished inmid-lateJunewhenfutures’marketpeaked tied to the ISIS threat in theMiddleEast.Thenumberofpositionsheldbyfinancialfunds,commoditypools,indexfundsandvariousothernon-industryentitiespeakedatmorethan550,700contractsjustbeforethesummersolstice.Thenetlength(derivedfromtakingthelongpositionsandsubtractingshortpositionsfromthetotal)peakedaweeklateratnearly480-millionbbl.
Theparticipationinthemarketbegsfordifferentiationfromthepreviousnotablecrashthiscentury.Yes,oilpricesdroppedmoreinthe2008/2009debacle,butmuchofthedropcameattheexpenseoffinancialcompaniesthatwerecoaxedtode-leverage.Theaggregatebookofbusinessinfuturesandoptionsisconsiderablyhigher(amongnon-commercialentities)thanitwaswhenweflippedthecalendarfrom2008to2009.
50.00
60.00
70.00
80.00
90.00
100.00
110.00
25.00
50.00
75.00
100.00
125.00
150.00
2008 WTI 2014 WTI
June 6, 2008Dollar collapse
of jobs data
July 3, 2008All-time high
September 15, 2008Lehman Bros. Bankruptcy
October 3, 2008TARP Program an-
nounced
November 11, 2014US Crude oil output tops 9 million b/d.
March 3, 2014Ukraine/Russia confl ict reaches
fever pitchJune 10, 2014
Mosul falls to ISIS
November 27, 2014OPEC leaves production unchanged
35.00
55.00
75.00
95.00
115.00
135.00
2008 Brent 2014 Brent
June 6, 2008ECB Hints at
Interest Rate Hike
September 15, 2008Lehman Bros. Bankruptcy
November 27, 2014OPEC leaves production unchanged
March 3, 2014Ukraine/Russia confl ict reaches
fever pitch
June 10, 2014Mosul falls to ISIS
July 3, 2008All-time high
2008 vs. 2014 WTI
2008 vs. 2014 Brent
5
AnothersubstantivedifferencearrivesviatheoutlookforU.S.production.Notwithstandingthepricecrash,virtuallynooneintheanalyticalpetroleumworldpredictsafall-offinU.S.productionin2015.Manyoftheprojectsthatareabouttogenerateproductionincreaseswerecommissionedthree-to-fiveyearsago.Therewillbetensofbillionsofdollars’worthofprojectcancellations incomingmonthsand thatcouldflatten theU.S.productioncurveorevenmove it lowerfrom2016-2020.ButU.S.oilproductionislikelytorangebetween9.3-millionb/dand9.5-millionb/din2015,withmostofthesignificantslowdowningrowthcominginthesecondhalfoftheyear.
Insummary,2015lookstobeatransitionalratherthanatransformativeyearforU.S.crude.NewoutputfromtheBakken,EagleFord,andPermianBasinplaysisunstoppableforthemoment,buttheseedsoflowerU.S.outputhavebeensown.
U.S. Field Production of Crude Oil (Thousand Barrels per Day)Thiscomingrevaluationofoilismuchmoreakintowhathappenedin1998and1999asoilproductionoutpacedsupplybyawidemargin,thanksinparttoalackofOPECdisciplineaccompaniedbyafinancialmessinAsianeconomies.
Buttherearemanyothersubstantialdifferencesbetweentheongoingpricecalamity,andwhathappenedinpreviousdebacles,particularlythe1998-1999and1986pricecrashes.
Oildidn’tcome into itsownasanassetclass favoredbyhedgefunds, indexfunds,ETFs,commoditypoolsandallofWallStreetuntilthe21stcentury,andparticularlysince2003.Thepapermarketthatrepresentsfutures,options,andotherderivativesisexponentiallylargerthanitwasinthedecadesofthe‘80’sand‘90’s.
Meanwhile,lastyearendedwithU.S.regulatorsopeningthedoorforfurtherexportsofcondensate,andweexpectthattherewillbealivelydebateamongspecialinterestsaboutliftingtheoverallcrudeexportbanin2015.Bothsidesontheissuemaymakecompellingcasesforliftingormaintainingtheban,butOPISbelievesthat2015bringsmuchmaneuvering,butlittleinthewayofpolicychanges.Refinersmaydesiresomesignalsontheissue,assomefaceexpansionprojectswhichcouldbejustifiedundercontinuationoftheban,butchallengedifcrudeoilexportsareallowed.
Footnote: Producers,refiners,andregulatorsallacknowledgethattheStrategicPetroleumReserveisa21stcenturyanachronism,giventhesurgeinNorthAmericanliquids’production,andmuchlessdependenceonforeignoil.WhenU.S.crudepricessurgedinJune2014,SPRbarrelsrepresentedaU.S.assetworthapproximately$74-billion.Byyear’send,thecollapseinoilpricestookthat“strategic”asset’svaluedownbyabout50percent.Lowcrudeoilpriceswillquietthecallforaslimmermorecontemporaryreserve,andanysalesfromthereservein2015willbelimitedtotemporaryneedsbasedonGulfCoaststormimpact.
0
2000
4000
6000
8000
10000
12000
Jan-
1960
Dec-
1961
Nov
-196
3O
ct-1
965
Sep-
1967
Aug-
1969
Jul-1
971
Jun-
1973
May
-197
5Ap
r-19
77M
ar-1
979
Feb-
1981
Jan-
1983
Dec-
1984
Nov
-198
6O
ct-1
988
Sep-
1990
Aug-
1992
Jul-1
994
Jun-
1996
May
-199
8Ap
r-20
00M
ar-2
002
Feb-
2004
Jan-
2006
Dec-
2007
Nov
-200
9O
ct-2
011
Sep-
2013
U.S. Field Production of Crude Oil (Thousand Barrels per Day)
Source: EIA
U.S. Field Production
6
Refining Gets Even More Bipolar It’sincrediblethatsomeU.S.refineriesarenowbundledintoMasterLimitedPartnership(MLP)structures,whichhavetypicallyrequiredvehiclesthatmeetcriteriaforveryconservativeandratablestreamsofincome.Refininghasgenerallybeenaprofitableenterprisesince2009,withcapacitycreepdwarfingthefewclosures(theHessplantinPt.Reading,N.J.andFlintHills’Alaskapropertycomeimmediatelytomind).Butthevariationsfrommonth-to-monthorquarter-to-quarterarefilledwithdramabefittingajuniorprom.
Lastyear,forexample,deliveredafastpacedtripfromthepenthousetothepoorhouseforrefinersinmanyportionsofthecountry.Distillatemarginswerereasonable,ifnotextraordinarilylucrative,foralloftheyearbutgasolinefinishedtheyearwithacollapsereminiscentofthe1978RedSox.Thestandardsofdeviationrelatedtorefineryincomewereoffthechartsin2014,andthosesamechartsindicateamuddledfuturein2015.Integratedoilcompaniesfaceaparticularchallengeas2015beginswithaviciousratherthanvirtuouscycle.Theyratchetedrunsuptoarecord16.822-millionb/dofcrudeoilandfeedstockbyyear’send,floodinganalreadystressedmarketwithplentyofunwantedgasolineand incrementaldiesel,heatingoil,and jet fuel.Toput thatnumber inproperperspective,considerthatyear-endrunsforU.S.refinersasrecentlyas2011werenearly2-millionb/dlower.Theexportmarketforlightproductsatthatpointsawmuchthesamevolumesastoday,sothehigherutilizationthreatenstocreateasloppyU.S.products’market.Theviciouscyclecomesviathethoughtprocessofcompanieswithequitycrudeandarefinedproducts’segment.Theycanfindahomeforlowpricedcrudeandkeeprunshigh,butfacerealdifficultyin“clearing”gasolineanddieselattherefinerygate.Theycanreducerunsandtightenproductsupplies,butthatcouldbringadditionalpressureonanalreadyoverburdenedcrudeoilmarket,particularlyforthevariouslightsweetgradesthathaveoverwhelmedNorthAtlanticmarketssincelastsummer.
Independentrefinersfacenosuchquandary.Fourofthesevenmajorrefiningcenters(U.S.GulfCoast,Group3,Chicago,andthePacificNorthwest)allexperiencedweekswheregasolinesoldforlessthanthevalueofcrudeoilinlate2014,andthat isclearlyunacceptable,particularlysincedistillatecrackshavenarrowedappreciablysincesummer.SellingCBOBorRBOBat less than$5barrelover thecostoffeedstockisa losingpropositionunlessdiesel,heatingoil,andjetfuelyieldmarginsbeyond$20barrel.Throwin theRINsconsiderationfor refinersand it’sclear that running16-million to16.5-millionb/dofcrudeoilmightrepresentarefinerdeathwishin2015.
Itisworthspecialmentiontonotethatpetroleumfutureswereapoorbarometerforrefiningmarginsthroughout2014,andwesuspectthatthesamewillholdtruein2015.ThankstothebottleneckinmovingGulfCoastfueltothenortheast,aswellasthecontinuedaftermathofearlierdecadeclosuresintheCaribbeanandCanadianMaritimes,theMiddleAtlanticandNewEnglandstatesappearentrenchedasthestrongestconsistentlinkinstatesidegasolineanddieselnumbers.We’llthrowintheexpectationoflittlechanceforanyprogressingettingnewAmerican-flaggedtankerstoferrymaterialfromTexasandLouisianarefinerstotheregion.IfyoutossinthelikelyclosingofaEuropeanrefineryortwo(despiteabriefrunofprosperityinlate2014)therecipethencallsforNYMEXfuturesthatareinflatedwhencomparedtomostU.S.physicalmarkets.
OPISbelievesthatrefinerymarginswillsurgeinthelatefirstquarterof2015withmuchof theincreasetiedtotypicalseasonalmaintenanceaswellassomediscretionarycuts.WestCoastprocessorsshouldbethefirstbeneficiariesoflowerruns,butintime,allregionswillhavetheirmoments.Lastyearproducedaverageannualgasolinecracksthatvariedfromabout$6bbl(versusLLS)attheGulfCoasttonearly$15bblontheWestCoast(versusANS),withdistillatecracks$8-$9bblhigher(exceptingtheWestCoastwherethedifferencewasabout$2bbl).
Gas Price
Market & ProductHigh cts/gal
DateLow
cts/galDate
High/Low Difference
Gulf Coast CBOB 290.77 6/20/2014 114.78 12/29/2014 175.99
Chicago RBOB 329.12 6/12/2014 117.2 12/29/2014 211.92
NYH RBOB 314.52 4/22/2014 143.03 12/31/2014 171.49
Group 3 Sub-Octane 297.55 6/19/2014 115.87 12/30/2014 181.68
L.A. CARBOB 332.79 4/10/2014 133.22 12/18/2014 199.57
San Francisco CARBOB
329.52 4/24/2014 132.6 12/16/2014 196.92
PNW sub-octane 330.27 6/20/2014 133.2 12/29/2014 197.07
Average 317.791 127.129 190.663
Gas Diff
Market & ProductHigh diff cts/gal
DateLow diff cts/gal
DateHigh/Low Difference
Gulf Coast CBOB 14 9/25/2014 -38 3/25/2014 52
Chicago RBOB 41 9/9-9/10/14 -29.5 12/29-12/30/2014 70.5
NYH RBOB 28.5 9/5/2014 -28 3/25-3/26/2014 56.5
Group 3 Sub-Octane 35.5 10/24/2014 -29.5 12/30-12/31/2014 65
L.A. CARBOB 34.5 10/2/2014 -19.5 12/18-19/2014 54
San Francisco CARBOB
27.5 9/29-10/2/14 -23 1/9, 1/15/2014 50.5
PNW sub-octane 32 9/4-9/5/14 -25 10/20/2014 57
Average 30.429 -27.5 57.929
7
Similarnumbersappearreasonablein2015,withenhancementsoftentiedtotheserendipityoflogistics’snagsthattemporarilywiden discounts for regional crude that is stranded (WestTexas refinerswere the beneficiaries of occasionallywidediscountsforMidlandcrudein2014).Butgenerally,theverywidedieselmarginsthatcharacterized2014maybehardtorepeatin2015,thankstolowerglobaldemandgrowthandawarmerwinter.Theearlymonthsof2014sawalotofdieselinnortherntierstatesmovetoindustrialandcommercialcustomersthatusedthefuelwhennaturalgassupplieswerecurtailedbythePolarVortex.ButbankpredictionsthatsuggestpoorrefiningreturnsinDecemberareapreviewofasystemicproblemin2015areoverreaching.
Offshore,mostrefineryanalystsbelievethatabout1.25-millionto1.75-millionb/dofglobalcapacityincreasesarecomingthisyear.MostoftheincreasescomeintheMiddleEastandChina,andmostnewprocessingequipmentisdesignedtomaximizedistillateyields,with estimatesof another750,000b/dof diesel available to end-users.Diesel sourced fromPersianGulfcountriesmaynotheadstateside,butitmaysurelyslowdowntheoccasionalexportsofdistillatefromtheU.S.GulfCoasttoEuropeorWestAfrica.AveryrobustexportmarkettoCentralandSouthAmericaisbuiltintoexpectationsforGulfCoastrefineriesunderanycircumstances.
Will the Downstream Renaissance Continue?Threeelementsmade2014perhapsthebestyearonrecordforfueldistributorsandretailers,althoughtherewereworriesthata“toogoodtobetrue”environmentcouldnotpossiblypersistintoanotheryear.Lastyearactuallygotofftoatypicallyroughstartwithsoftvolumesandstressedmarginsinthefirstfourmonthsoftheyear,butfortunesturnedinthelasttwo-thirdsof2014andpromisetocontinueintothefirstpartof2015.
Firstandforemost,gasolinemarginsweresensationalwhenviewedacrosstheexpanseofthecontinent.Averagerack-to-retailgrossmarginsfor2014weremeasuredbyOPISat22.3ctsgal,easilytoppingthe19ctsgalfrom2013thatpreviouslyestablishedthehighwatermarkforthecentury.Therewasevenaslight,butnoticeable,uptickinpremiumgasolinesales.Itappearedasthoughsomemotoriststreatedtheirvehiclestoabitmoreoctaneasthepriceslidequickenedandbrought92or93octanepremiumgradesbelow$2.75galinmostcases.Theuptickwassubtle,atoneortwopercentagepoints,butitismeaningfulwhenoneconsidersthathigheroctaneblendstypicallyaffordedmarketersanother5-10ctsgalofprofit.
ULSD Diff
Market & ProductHigh diff cts/gal
DateLow diff cts/gal
DateHigh/Low Dif-ference
Gulf Coast ULSD 2.75 10/9/2014 -47 12/23/2014 49.75
Chicago ULSD 50 10/31/2014 -24.5 12/31/2014 74.5
NYH ULSD 45 2/5-2/6 -1.75 7/2/2014 46.75
Group 3 ULSD 75 11/6/2014 -34 1/31/2014 109
L.A. CARB diesel 15 5/6/2014 -24 12/15-12/16 39
SF CARB Diesel 17 10/3/2014 -30 12/16/2014 47
PNW ULSD 40 8/28-9/5 -15 12/17/2014 55
Average 34.964 -25.179 60.143
ULSD Price
Market & ProductHigh
cts/galDate
Low cts/gal
DateHigh/Low Difference
Gulf Coast ULSD 306.05 2/20/2014 152.07 12/23/2014 153.98
Chicago ULSD 325.77 2/20/2014 158.86 12/31/2014 166.91
NYH ULSD 348.03 2/7/2014 183.91 12/31/2014 164.12
Group 3 ULSD 320.87 11/6/2014 161.36 12/31/2014 159.51
L.A. CARB diesel 312.85 6/20/2014 171.5 12/16/2014 141.35
SF CARB Diesel 312.67 4/21/2014 162 12/16/2014 150.67
PNW ULSD 326.58 9/3/2014 170.66 12/29/2014 155.92
Average 321.831 165.766 156.066
165.0
185.0
205.0
225.0
245.0
265.0
285.0
305.0
325.0
345.0
365.0
385.0
305.0
325.0
345.0
365.0
385.0
405.0
Weekly Dsl Rack vs Retail
Dsl Retail Dsl Rack
Dsl Retail
Dsl Rack
Weekly Diesel Rack vs. Retail
8
Itwouldbeunreasonabletobelievethat2015willbringasimilarlyprosperousenvironmentforgasolinemarketers,butthatdoesn’tmeanthatamaturingindustrywillreturntothe12.8ctsgalto13.1ctsgalgrossmarginsthatprevailedin2004-2007,andagainin2009.Since2010,grossgasolinemarginshaveaveragedjustshyof19ctsgal,witharangeofannualmarginsfairlylowat16.3-19ctsgalwhen2014isdiscarded.Eachofthefourpreviousyearshasbroughtplentyofregionalvolatilityinspotgasolineprices,andthatappearstoworkinmarketers’favor.
Aswasthecasein2008,gasolinemarginswidenedaswholesalepricesfellasmuchas$1.90galfromtheirspringhighs.Unlike2008,thedownswingwasnotaccompaniedbydramaticdemanddestructionfomentedbyfinancialworries.Thelastfourmonthsof2008broughtmarginenhancement,buttheyalsoincludedanaverage400,000b/dofyear-on-yeardemanddestruction.EnergyInformationAdministration(EIA)weeklydatareportsforthesame“lastthird”ofthejustcompletedyearimplysignificantsalesgrowth.Highermarginsandrobustsalesareatoughcombinationtobeat.
Therewasofcoursetremendousvariationacrossstatesandregions.WestCoastandNewEnglandmarketsprovidedthemostrewardingmarginenvironment,astheytraditionallyhaveinthe21stcentury.ButmarginsinchallengingareasliketheU.S.southeastorsouthwesttoppedpreviousyears,withNovemberandDecemberparticularlyrewarding.EvenBigBoxlocationssoldgasolineforanaverage10ctsgalabovecostfromtheLaborDaythroughNewYear’sEveperiod,findingthataggressivepricepointsdidn’thavetomatchcostinordertoliftcustomercountsinside.
Gasolinemarginsweresatisfyingbutdieselmarginsweresimplyoffthecharts.Distributorsandretailerswhomaderoomforadieselofferingonpumpislandswererewardedbya2014rack-to-retailmarginaverageof35ctsgalfortheyear,andthatincludedanumberofweekswithmarginsabove40ctsgal.Theonlypreviousyearthatsawamarginapproachingthesametierwas2008,andthatyearsawdramaticdemanddestructioncrossthesecondhalfofthatperiod.Theyear-on-yearimprovementfrom2013approached9ctsgal,orabout38percent,andwiderack-to-retailspreadsprevailedas2015began.
Asthemore“global”product,dieselmayhaveachallengingfutureinthecoastalmarketsin2015.Inpreviousyears,strongexportshaveliftedexteriorpointsofthecountrytonumbersoftenwellabovelevelsinland-lockedMidcontinentmarkets.Thattrendmaygivewaytoadifferentdynamicin2015.Just-in-timeinventorymanagementisclearlyinadequatetomanageburstsofdemandtiedtoagriculturalplantingandharvests,soMidwesternmarketsmaycontinuetotakeflightversusN.Y.,LosAngeles,andGulfCoastpriceswhenthosedemandburstshitlocalregions.Concurrently,refinersonthecoastsmayfacemoredifficultyinplacingdistillatecargoesintooffshoredestinations,thanksinparttotheaforementionedstart-upin700,000b/dofnewglobaldistillateproduction.
So,a35ctsgalgrossmarginenvironmentmightberealisticforthefirstchapterof2015,butMidcontinentmarketingmarginswillcompresswiththeagriculturalbuyingspurts.Meanwhile,differencesbetweenstatesmaynarrowascoastalrefinersstruggletomaintainexportsthatflattenedoutatabout1-millionb/din2015.Arack-to-retailmarginof25ctsgalormore,slightlyabovetheaverage24.1ctsgalreturnfrom2009-2013isareasonableprojection.Hugevariationswillprevail–OPISrecordedsomeoccasionalweeklygrossmarginsof90ctsgalto$1.00galinsomeRockyMountainstatesinlate2014.
Thefinalfeatherinfuelretailers’capscameviamuchhigherpropertyvaluations.Highervaluationsfordistributioncontracts,dealerrentagreements,andothertypically“sleepy”segmentsofthedownstreampetroleumbusinesscamefirstfromWallStreet.Yearsago,GlobalPetroleumbecamethefirstpubliccompanytoputelementsofdistributionincomeintoan“MLP-
15.0
25.0
35.0
45.0
55.0
65.0
75.0
85.0
95.0
105.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Weekly Unl Margin vs Dsl Margin
Unl Margin Dsl Margin
Unl Margin
Dsl Margin
Weekly Unleaded Margin vs. Diesel Margin
9
Start Date Unl Retail Unl Net Unl RackUnl
MarginDsl Retail Dsl Net Dsl Rack
Dsl Margin
12/30/2013 332.3 281.7 262.6 19.1 387.6 330.7 305.4 25.2
1/6/2014 331.3 280.8 262.0 18.9 387.4 330.5 299.6 30.9
1/13/2014 329.8 279.4 260.3 19.1 386.3 329.4 299.9 29.6
1/20/2014 328.6 278.2 260.3 17.9 386.2 329.3 305.2 24.1
1/27/2014 328.0 277.6 259.8 17.8 389.2 332.2 313.7 18.5
2/3/2014 327.8 277.4 261.9 15.4 392.3 335.3 316.5 18.8
2/10/2014 333.6 283.1 270.3 12.7 395.2 338.2 319.2 19.0
2/17/2014 339.3 288.8 275.5 13.3 397.6 340.6 324.8 15.8
2/24/2014 344.7 294.0 278.4 15.6 400.2 343.0 322.3 20.8
3/3/2014 348.1 297.3 282.8 14.5 401.1 344.0 322.1 21.9
3/10/2014 350.9 300.2 285.8 14.4 400.9 343.8 314.4 29.4
3/17/2014 352.9 302.1 285.6 16.5 399.6 342.5 308.6 34.0
3/24/2014 354.3 303.5 287.8 15.7 398.0 341.0 308.9 32.2
3/31/2014 357.2 306.4 293.4 13.0 397.0 340.0 308.4 31.6
4/7/2014 362.1 311.3 299.3 12.0 396.2 339.3 308.7 30.5
4/14/2014 366.2 315.4 301.1 14.3 396.0 339.1 313.4 25.7
4/21/2014 368.9 318.0 302.8 15.2 396.4 339.4 315.1 24.3
4/28/2014 368.4 317.6 297.1 20.5 396.3 339.3 309.3 30.0
5/5/2014 366.2 315.4 291.0 24.4 395.1 338.1 305.3 32.8
5/12/2014 364.6 313.8 293.9 19.9 393.8 336.8 305.2 31.6
5/19/2014 365.3 314.5 297.8 16.7 392.9 336.0 304.7 31.3
5/26/2014 366.2 315.4 298.5 16.9 392.2 335.3 302.4 32.9
6/2/2014 366.0 315.2 295.9 19.3 391.2 334.3 295.4 38.9
6/9/2014 365.4 314.6 297.9 16.6 389.7 332.8 297.3 35.5
6/16/2014 367.8 317.0 301.2 15.7 389.5 332.7 306.3 26.4
6/23/2014 368.3 317.5 298.5 18.9 390.4 333.6 308.3 25.3
6/30/2014 366.5 315.8 293.4 22.4 390.1 333.2 302.2 31.0
7/7/2014 363.2 312.6 285.8 26.8 389.1 332.2 295.6 36.5
7/14/2014 358.9 308.3 279.2 29.1 387.3 330.3 292.1 38.2
7/21/2014 354.3 303.8 276.3 27.5 385.4 328.5 293.5 35.0
7/28/2014 351.2 300.7 273.6 27.1 384.2 327.3 296.7 30.6
8/4/2014 348.1 297.6 273.1 24.6 383.1 326.1 295.5 30.6
8/11/2014 346.7 296.3 274.3 22.0 382.2 325.3 295.0 30.3
8/18/2014 344.0 293.6 272.0 21.6 381.2 324.3 291.4 32.9
8/25/2014 343.6 293.2 273.4 19.8 380.3 323.5 293.6 29.9
9/1/2014 343.8 293.5 273.2 20.2 379.9 323.1 293.7 29.4
9/8/2014 341.3 291.0 265.1 25.9 379.1 322.3 286.9 35.4
9/15/2014 335.8 285.6 260.8 24.8 377.0 320.2 281.6 38.6
9/22/2014 334.3 284.1 262.7 21.4 374.9 318.1 277.9 40.2
9/29/2014 331.6 281.3 253.4 27.9 373.0 316.3 276.3 40.0
10/6/2014 323.8 273.5 237.2 36.2 370.0 313.3 270.2 43.1
10/13/2014 314.4 264.2 226.2 38.0 365.7 309.1 264.9 44.2
10/20/2014 307.0 256.7 225.2 31.5 362.6 306.0 267.1 38.9
10/27/2014 300.5 250.3 222.4 27.9 360.2 303.7 268.0 35.6
11/3/2014 294.8 244.7 219.4 25.3 360.9 304.3 275.6 28.7
11/10/2014 290.9 240.8 214.5 26.3 363.6 306.9 270.9 36.0
11/17/2014 284.1 234.1 207.4 26.7 360.8 304.1 261.2 43.0
11/24/2014 279.1 229.1 205.2 23.9 358.0 301.4 257.2 44.2
12/1/2014 271.1 221.4 189.0 32.4 353.8 297.3 236.1 61.2
12/8/2014 259.8 210.2 173.1 37.1 345.4 289.0 213.5 75.6
12/15/2014 245.4 195.9 157.6 38.3 333.6 277.5 195.8 81.7
12/22/2014 233.7 184.4 150.1 34.3 322.1 266.1 189.2 76.9
12/29/2014 227.5 178.3 147.0 31.2 315.6 259.8 183.3 76.5
Weekly Margin
10
able” structure, and they have been followedwith similarmoves fromNorthernTier,ETP (Sun), andCrossAmericaPartners(affiliatedwithCSTBrands).OPISanticipatesthatat least two new publicly tradedMaster Limited Partnerswill debut on Wall Street in 2015, and we wouldn’t besurprisedtoseesometraditionalcompaniescreateormorphintosimilarentities.
Secondly, retail gasoline properties are in demand fromrefiners who continue to bundle distribution operationsinto a traditional corporate structure. Refiners are awareofafairlyflatdemandgrowthcurvefordomesticgasolineanddieselsalesthroughdecade’send.Flattolowergrowthin transportation fuels will be impacted bymuch tougher(and difficult to repeal) CAFÉ standards as well as U.S.demographicdatathatfindsyoungpeopledrivingless,andanagingpopulationcurtailing its travel.Thanks inpart tothepenaltiesthatcomewithRINspurchases,highrefineryutilization, and less speculative trading, a sale of bulkgasolineinthespotmarketisoftentheleastdesirablesalefor
arefiner.The“merchantrefinery”modelthatprevailedfrom1990to2010maygivewaytosomethingthatmightappearnostalgic,butisinfactpurposeful.Througheitherlongtermcontracts,orviathepurchaseofdownstreamdistributionandretailassets,U.S.refinersareracingtowardmoreintegrationsotheyhaveahomeforunwantedlightproducts.Themodelfor thisnewinitiativemaybeMarathonPetroleum,whichcannowplacemuchof itsgrowingproduction in itsownsystem,thankstoitspurchaseofHessin2014.
This brings us conveniently to our final thought for2015. From1990 through 2010,we sawmultinational oilcompaniesexit fromretailoperations,partlyrationalizeorconsolidaterefiningproperties,andconcentratemosteffortandcapitaloninternationalexplorationandproduction.Theabilitytofindahomeforcrudeoilaswellasgasolineandotherlightproductsisparticularlyseductiveinwhatmaybeanewlow-to-moderatepricederaforpetroleum.Weexpecttoseemoreinterestincontrollingthedistributionandsaleofgasolinebymega-companiesinthecomingyear.
TOP TEN STORIES OF 2014 •OPECmeets inViennaas theU.S.celebratesThanksgivingDay, and simply rolls over its existing production quota.Later, key oil ministers acknowledge that the cartel wouldrathermaintainmarketsharethancutoutputandcedesalestogrowingnon-OPECproduction.Pricesslideto67-monthlows.
•Brentcrudesurgestoover$115/bbl(June19-20,2014)andWestTexasIntermediatetops$107.50/bblonfearsthatISISinsurgentscouldthreatenoilinstallationsinsouthernIraq.Thefearsprovetobemisguidedwithcrudeonasteadydowntrendthroughtherestoftheyear.(ISISreferstotheIslamicStateofIraqandSyria,andisalsoreferredtoasISIL)
•U.S.crudeoilproductionatyear’sendtops9.1millionb/d,representingthehighestdomesticoutputsinceFebruary1986.Early2015productionwillalmostcertainlytop9.173millionb/d, toppingFebruary1986,andtherebyreflect thehighestoutputsince1973.Production isapproximately4.2millionb/dhigherwhencomparedtotheDecember2005level.
•TheEnvironmentalProtectionAgency“punts”onthefinal2014RenewableFuelStandard(RFS2)(Nov.21)notingthatitintends“totakeactiononthe2014standardsrulein2015priortoorinconjunctionwithactiononthe2015standardsrule.”TherulingaddstoRINs’pricinguncertaintyfor2014andinto2015.
•Mid-autumnbringsdrasticrevisionsfortheworldandtheU.S.TheInternationalEnergyAgencyslashes its forecastfor global oil demand growth, downgrading the 2014annualgrowthrateto700,000b/d(from900,000b/d)andremoves300,000b/d fromthe2015forecast.TheEnergy
InformationAdministrationsharplycutsitsprojectionsfor2015gasolinepumpprices,droppingtheprevioustargetby34ctsgal,positinga$2.60galaveragefor2015.
•Midwestern propane prices hit an all-time record of$4.325/galonJan.24thankstothe2014PolarVortexanddownstreamshortages.Byyear’send,Midwest(Conway)propaneisworthlessthan48cts/gal.
•PioneerandEnterprisereceiverulingsfromtheDepartmentofCommerceallowingtheexportof“processed”condensateforexport.Thecontroversialmoveonlyallowsforexportsofcondensatetreatedbystabilizers.
•A robust secondary market for Colonial Pipeline linespacedevelops,thankstowidedifferencesbetweenGulfCoast and NewYork Harbor prices. Those companieswith incremental line spacecan resell the rights to thatspace for asmuch as 20-25cts/gal.By autumn, severalkey refiners begin charging additional fees to reflectadditionalcostsofshipping.
•Marathon purchases over 1,256 company-operated Hessstations and 86 branded dealers fromHess in a stunningdealvaluedat$2.8billion.ThetransactionwasannouncedinMay,closedinOctober,andincludedallHesstransportoperationsaswellasshipperhistoryonvariouspipelines.
•Enterprise pays $4.41 billion and acquires massiveOiltankingPartners in a deal thatwill give it immenseexportoperationsforcrudeoil,refinedproductsandLPGwithintheUnitedStates.
11
SPOT TICKERALL REFINED PRODUCT PRICES. ALL MAJOR U.S. SPOT MARKETS. ALL DAY LONG.
To start your free 10-day trial:Visit www.opisnet.com/offers/reports/ost15004.aspx • Call 888.301.2645
Use the OPIS Spot Ticker to time your rack purchases and watch your savings add up!
Paying just a penny or two more per gallon can add up to thousands of dollars in fuel costs over the course of a year.
Use the OPIS Spot Ticker to follow the market and make informed decisions on whether to dispatch your trucks early or delay them until after price changes go into effect.
It’s an essential tool for marketers, suppliers, traders, brokers and large bulk buyers to assess the value of all grades of gasoline, diesel, jet fuel and ethanol as they trade in real time.
Free 10-Day Trial Available!
How Much Can You Save on Your Fuel Purchases?
Access the world’s largest historical petroleum price database so you can:
• Comparesuppliers
• Uncoverhistoricaltrends
• Audit/reconcileinvoices
• Analyzefuelhedges
• Assessnon-traditionalcontractoptions
• Discoverarbitrageopportunities
• Explorenewmarkets
• Improveyourfuelpurchasing
• Andmuchmore!
SAVE TIME & MONEY WITH Get historical fuel price data for gasoline, diesel and biodiesel racks, refined spot, residual fuel, LP, feedstocks and futures.
Visit www.opisnet.com/offers/reports/ts15002.aspx or call toll-free 888.301.2645 to start your trial.
Try this online resource FREE for 10 days!
