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W
orld crude oil prices reported
by EIA as of February 19, 1999: Saudi Arabian Lt (34 API) - $9.75, Nigerian Bonny Light
(37 API) - $10.10, Indonesia Minas (34 API) $10.30, UK Brent (38 API) - $10.21, Venezuela
Tia Juana Light (31) $9.36, Mexico Maya
(22 API) - $7.03, Mexico isthmus (33) $9.21, and
Russia Urals (32 API) $9.46.
Posted prices for crude oil as of February 26, 1999
were: Scurlock, West Texas Intermediate (WTI) $9.50; Louisiana Lt. Sweet Onshore $8.50,
Oklahoma Sweet $9.50; Refiner posted prices were: WTI (36 API) $11.50, Louisiana Lt. Sweet
Onshore $11.00, Kern River (13 API) $7.50;
Alaska North Slope (28 API) $10.80;
Kettleman Hill (34 API) $9.70 and Wilmington (17 API) $7.60 (est).
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East Coast Gasoline and Heating Oil
East of the Rockies - Refinery rates were about the same in PADDs I and II, but down
almost 100,000 bpd in PADD III at 6.8 million bpd. Crude oil inventories increased in all three
regions.
Gasoline production the the three regions dropped but inventories shot up, which is a clear
sign that refining rates are higher than product demand. The amounts of gasoline stored in
the eastern region, 66.9 million barrels, and the amount in the midwest, 60 million, are
significantly higher than normal. Continued production and imports at the current rates will
completely overload the system soon. It is questionable whether refiners will be able to continue
to refrain from dumping product on the market for much longer.
Distillate production was about even, with slightly higher rates in the Gulf Coast area. Inventories
decreased. East Coast storage levels are just now reaching the October 1998 high level. Clearly,
there will be plenty of heating oil and diesel around for the rest of 1999.
Gasoline prices decreased: PAD I - $.89,
PAD II - $.86, and $.88 in PAD III.
Diesel prices on February 22 were slightly lower:
PADD I - $.96, PADD II - $.93, and PADD III - $.93
The retail price of heating oil on February 15 was reported to be $.32 and the wholesale
price was $.86.
FORECAST: Gasoline prices will remain low and may drop further until spring demand picks up.
But even then, the supply is plentiful and competition in the eastern areas may keep the prices
down even through the traditional spring run.
Rocky Mountain Gasoline and Diesel
Rocky Mountain - Gasoline inventories are high for this region at 7.9
million barrels. Distillate inventories are also higher than normal, especially for this
time of year.
The price of regular gasoline remained at
$.96 per gallon and the price of diesel was still at $.99 per gallon.
Rocky Mountain prices seem to be fairly stable, but may drop if refiners have to lower
tank levels over the next few weeks.
West Coast Gasoline and Diesel Forecast
West Coast - Refining rates were holding steady and stocks of gasoline
have been drawn down to very low levels. Normally, refineries would have built inventories by now
to supply increased demand in spring months. It appears that the western refineries are purposely
drawing down inventories to tighten the supply, which they can then point to when they
justify impending price increases.
The TOSCO refinery fire and shutdown may have
caused a minor bit of temporary inconvenience and shifting of supply lines, but should not have any real long
term effect on the supply in PADD V or, specifically, California. The Martinez refinery makes less than
5% of the gasoline produced in California and that amount can easily be made up by increased
distillation rates at the other refineries. Whether or not the refineries choose to make up the
supply is another question. California refiners and retailers are expected to make
the most of the news and increase prices. One ARCO in the Sacramento area increased the cost of regular by 5 cents
per gallon within 24 hours after the news of the fire!
Since the western region is an isolated market, exporting almost nothing and importing only a tiny
amount of Indonesian crude oil, the only ones affected by events like the TOSCO
fire are those who live and work in the West (PADD V area).
On February 22 the average price of (reg-mid-premium)
gasoline in PADD V remained at $1.12 per gallon.
The price of Regular was at $1.07 per gallon.
The average price of diesel in PADD V decreased to $1.03 and Californian's are paying
$1.10 per gallon, one cent less than last week.
FORECAST: Considering the current low inventory, coupled with the psychological effect of
a refinery fire in California, it is likely that the price of gasoline will increase. The supply
of diesel is a bit high, so prices should remain stable, but don't be surprised if they increase
too due to the increased in gasoline prices. (The refiner can reason that distillate
can be cracked into gasoline, therefore, as the value of gasoline increases, so does the value of
distillate).
For a good graph of gasoline and diesel prices since 1997, take a look at the EIA graph.
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