OPIS Headlines

May 3, 2016
Rare Chinese Gasoline Cargo Heading to Caribs, USGC in Late May

A rare Chinese gasoline cargo is heading across the Pacific Ocean towards the Panama Canal, aiming to deliver the cargo in the Caribbean, Mexico or even Florida, some trading and shipping sources told OPIS on Monday.

A Medium Range tanker, Dalmacija, is loaded with about 300,000 bbl of gasoline in China in late-April or early May. The cargo belongs to Trafigura and the ship is also under a long-term charter to Trafigura.

According to AIS satellite tracker, the ship is expected to be in Houston on May 25.

However, sources said that this ship has multiple delivery options, including Mexico, the Gulf Coast, the Caribbean, Ecuador and Florida. The final cargo destination may not have been decided yet. Trafigura will have the final say on the cargo destination.

It is noted that the U.S. has had two long-range 1 (LR1) ships loaded with gasoline floating in the Gulf of Mexico since February. A third LR1 tanker, SCF Plymouth, is reported fixed on a U.S.-bound fixture from India, but has remained moored off Huelva in Spain since the first week of March. As of Tuesday, SCF Plymouth remains stationary off the coast of Spain. The ship is chartered by ATMI/Total.

Trafigura's name recently also had been associated with a couple of other gasoline storage situations in PADD3 involving LR1s. Trade sources cited storage play or capitalizing on the gasoline price contango seen earlier this year as factors, but these cases also could be driven by temporary in-house logistics issues at the trading house.

La Boheme loaded 450,000 bbl of gasoline on the Gulf Coast on Feb. 25, and it has been sitting offshore since then. The Navig8 Honor was also loaded with gasoline for temporary storage in recent months, but the cargo was discharged on April 28. Navig8 Honor is now sailing to Europe.

Besides floating storage, the U.S. Gulf Coast is filled to the gills with gasoline due to strong refining margins. However, analysts are expecting very bullish summer gasoline demand. The growing gasoline inventory would be something to watch for, as it could take some air out of the bullish demand impact on market and refining margins.

OPIS reported on April 19 that the U.S. gasoline market has been weighed down by rising inventories, high refinery utilization and strong import flows in the past month, and the growing pressure is not letting up anytime soon.

The U.S. was expected to continue to see an increase in gasoline inventories, thanks to a relatively strong price contango in April. Also, imports from Europe into the U.S. East Coast will remain strong due to an open arbitrage window. The market is also surrounded by at least four floating storage cargoes, and that number may grow. These bearish supply fundamentals will collide with the projected bullish summer gasoline demand spike in less than two months, keeping a cap on any potential price spike.

A wider gasoline price contango this year has triggered some market plays not seen in previous years.

Some gasoline players began to blend F2 summer gasoline as early as February, taking advantage of the cheaper prompt values than forward. The summer barrels could then be stored away with the contango price rolls paying for storage.

The 2ct/gal contango in April continued to encourage gasoline players and oil companies to store more barrels over the next several weeks. The storage play was evident in the EIA gasoline inventory data. The prompt RBOB price contango is down to about a penny on Tuesday.

Meanwhile, China's gasoline demand/supply balance is now tilting toward an oversupply, compared with a mostly balanced gasoline market late last year, traders said.

China is pushed to export more gasoline due to a higher-than-expected import volume of reformates, they said. Reformates are used as octane boosters in gasoline blending.

Become a better fuel buyer without ever leaving your desk – sign up now for the OPIS Basics of Fuel Buying eLearning course. Taught by 30+ year industry veteran Scott Berhang, this 11-module online training program will guide you through everything you need to know about purchasing physical fuel. Visit www.opisnet.com/events/fuel-buying-online.aspx or call our eLearning team toll-free at 888-301-2645 for more details and to get started.


April 28, 2016
OPIS Launches Exclusive "Rack Deal Evaluator"

Oil Price Information Service (OPIS) has launched a new product to allow buyers and sellers of wholesale gasoline and diesel fuel to quickly evaluate what types of deals are best for them among the growing assortment of rack price offerings in the marketplace.

Using the new OPIS product -- the OPIS Rack Deal Evaluator (RDE) -- buyers of wholesale terminal barrels can quickly determine if it is in their best interest to purchase gasoline and diesel based on a posted rack price basis, or if it would be cheaper over time to price using pricing formulas indexed to spot market prices. RDE also allows customers the opportunity to compare NYMEX-based deals, or fixed price deals to OPIS rack prices.

Sellers of fuel can make the same calculations -- to determine which type of price index is best for them to make a profit, to be fair to their customers, and to allow them to remain competitive in the marketplace.

"In just a few simple steps, the OPIS Rack Deal Evaluator helps you to verify which rack pricing options are best for you," says Tanya Feyereisen, Director of Rack Pricing at OPIS.

RDE allows customers to select pricing options from OPIS' extensive nationwide rack pricing database using gross or net prices from OPIS standard and terminal rack pricing formats.

Customers can pinpoint specific rack markets, specify a product and a supplier and then run a comparison to what other pricing options might be available from that supplier -- NYMEX-related pricing, spot index related pricing, or fixed prices.

The new OPIS tool allows customers to evaluate the deal by looking back and comparing what the results would have yielded in the past week, month or year. RDE allows access to a year's worth of OPIS pricing history to aid in evaluating prospective deals.

The RDE informational data base also allows users to add or remove additional fees potentially impacting the cost of moving product into the supply chain -- the value of RINs, the cost of pipeline line space, etc. The tool also allows customers to define other product costs or factors that may be unique to their individual markets.

Once all the relevant data has been plugged into RDE, simply click "Results" and a full display of which pricing options are best for you is instantly available. The display allows you to compare in an easy-to-read format the different pricing options and formats over the selected period of time.

The results can easily be exported into an Excel worksheet to be saved and updated daily so you can keep abreast of the progress of the pricing option selected versus the OPIS rack posted price.

"We think RDE is a great tool to allow buyers and sellers of gasoline and diesel to negotiate better long-term pricing deals," said Brian Crotty, OPIS CEO.

"It is a simple, quick, efficient process that in a few steps allows buyers and sellers to evaluate deals using the same data and database," Crotty points out.

"RDE also affords customers the flexibility to input pricing data that might be exclusive to their individual markets," he added.

Importantly, RDE allows buyers and sellers to negotiate deals on an independent platform while giving each party the flexibility to input pricing data that may be unique to their markets.

Try the just-released OPIS Rack Deal Evaluator and see how your formula deals stack up -- go here to begin your free 4-week trial today: www.opisnet.com/offers/reports/RDE16004.aspx

For more information, contact:

Tanya Feyereisen
Director of Rack Pricing
OPIS | Oil Price Information Service
Phone: 301 287 2531
Email: tfeyereisen@opisnet.com

 

How does your formula deal stack up against the posted rack price? Use the just-released OPIS Rack Deal Evaluator to compare a rack price with the growing assortment of formula deals offered by suppliers. This innovative web tool allows you to input benchmark details, formula terms (either a fixed price or as a basis to spot, rack, NYMEX or a combination), and additional fees for moving product and instantly evaluates whether you made a good (or not so good) deal before entering into your next fuel supply contract. See for yourself with a 4 week trial – visit www.opisnet.com/products/rack-deal-evaluator.aspx to sign up now or call toll-free 888.301.2645.


April 26, 2016
Retail Prices under $2/gal Vanishing

It wasn't that long ago that just about every U.S. state sported average gasoline prices below $2/gal -- less than two months ago in fact. However, a sharp move higher in Brent and West Texas crude prices coupled with a nearly 20ct/gal rise in April in RBOB gasoline futures has pushed the majority of U.S. states above the $2/gal mark. And if the momentum of the past few weeks continues -- and some think it will because of solid gasoline demand -- it is not unreasonable to expect all 50 U.S. states to have gasoline prices over the $2/gal number.

A look at current statewide prices surveyed by OPIS reveals just 11 U.S. states with average prices for regular grade below $2/gal. And the price averages in all 11 states are now within reach of $2/gal, with average prices ranging from $1.913/gal (Texas) to $1.982/gal (New Mexico).

Besides Texas and New Mexico, the remaining states below $2/gal are Alabama ($1.949); Arkansas ($1.936); Kansas ($1.974); Louisiana ($1.94); Missouri ($1.929); Mississippi ($1.928); Oklahoma ($1.932); South Carolina ($1.94) and Virginia ($1.973).

The rate at which prices have been going up in the last two weeks could soon push a few of the 11 states over $2/gal.

National prices average just over $2.14/gal and are up 3cts/gal in the last week and a dozen cents in the last month but remain about 40cts/gal below year-ago numbers, a gap that is narrowing.

Gasoline futures and physical bulk prices, which help define the underlying numbers that impact pump prices, gained another 4 to 8cts/gal on the day. The biggest increase (8.2cts/gal) came in the U.S. Gulf Coast, a supply source for many of the states where prices are currently below $2/gal.

Push that cost through to retail and the sub-$2/gal retail hallmark vanishes.

 

Become a better fuel buyer without ever leaving your desk – sign up now for the OPIS Basics of Fuel Buying eLearning course. Taught by 30+ year industry veteran Scott Berhang, this 11-module online training program will guide you through everything you need to know about purchasing physical fuel. Visit www.opisnet.com/events/fuel-buying-online.aspx or call our eLearning team toll-free at 888-301-2645 for more details and to get started.


April 19, 2016
Medallion Pipeline Seeks W. Texas Crude Shipping Interest for New Expansions

Medallion Pipeline Company said on Tuesday that it has launched a binding Open Season which solicits long-term commitments from shippers for firm transportation capacity on the fifth major expansion of Medallion's existing crude oil pipeline system in West Texas.

With the addition of the current project proposed by the open season, and two other projects proposed in two successful preceding open seasons in February 2016, Medallion's operations will consist of approximately 380 miles of pipeline facilities providing shippers with flexibility to move crude oil production in the region to multiple markets via multiple transportation routes.

The Martin Lateral is a proposed 25,000-b/d crude oil pipeline, which will aggregate crude oil from multiple points of origin in Martin County, Texas, and extend in a southeasterly direction to a point of destination at the new Midland Hub in Midland County, Texas.

The Midland Lateral is a proposed bi-directional crude oil pipeline, which will commence at the interconnection with the Martin Lateral at the Midland Hub and extend in a southeasterly direction to the existing Garden City Station where it interconnects with Medallion Pipeline's existing Wolfcamp Connector mainline, the Reagan Gathering Extension, and the Midkiff Lateral, as expanded and extended. The Midland Lateral is proposed to be capable of transporting 25,000 b/d of crude oil from the Midland Hub to the Garden City Station and 90,000 b/d from the Garden City Station to the Midland Hub.

Medallion is conducting the binding Open Season to obtain long-term volume commitments for firm transportation capacity on the Martin Lateral and the Midland Lateral (the Expansion Project).

The Open Season provides an opportunity for interested shippers to acquire long- term firm capacity, under minimum 10-year term Transportation Service Agreements and other eligibility requirements, as Committed Firm Shippers on the Expansion Project.

The Expansion Project is expected to commence full commercial operations in the third quarter of 2016, although certain segments of the Expansion Project may commence service on an interim basis on an earlier date.

The Open Season began on Monday, April 18, 2016 and ends on Wednesday, May 11, 2016.

 

Become a better fuel buyer without ever leaving your desk – sign up now for the OPIS Basics of Fuel Buying eLearning course. Taught by 30+ year industry veteran Scott Berhang, this 11-module online training program will guide you through everything you need to know about purchasing physical fuel. Visit www.opisnet.com/events/fuel-buying-online.aspx or call our eLearning team toll-free at 888-301-2645 for more details and to get started.


April 15, 2016
Streak of 2,479 Days Is Finally Broken for U.S. Fuels

For the first time since July 2, 2009, the average pump price for diesel fuel is below the average price for gasoline on a nationwide basis.

In the 2016 Outlook projections, OPIS analysts predicted that diesel would fall below gasoline prices, and indeed the first such instance occurred overnight. The average gasoline price as calculated among 130,000 fueling sites was measured at $2.1103 gal this morning, compared with $2.1098 gal for diesel. OPIS expects that the trend toward slightly higher gasoline prices and slightly lower diesel numbers will continue and projects that diesel will average less than gasoline for the second calendar quarter.

In the new century, only seven of 65 calendar quarters have seen diesel prices average beneath those of gasoline. The last such instance was the third quarter of 2004, which roughly overlapped with most of the driving season that year. Diesel has higher federal taxes, and many states attach higher road taxes to diesel as well, so the fuel starts at a disadvantage to retail gasoline. On a dollars-per-BTU basis, diesel has been the bargain fuel for many months.

Seventeen states now find diesel at a cheaper price than gasoline. The largest difference shows up in California, where gasoline commands about 33cts gal more than diesel. Among states with high diesel prices, there is no peer for Hawaii, where the price of diesel averages $4.06 gal, versus $2.61 gal for gasoline.

Although consumers and fleets are beneficiaries of the move, the softer diesel numbers are symptomatic of a global market where perhaps too many refiners have concentrated on maximizing diesel yields, just as demand from emerging countries has slowed. Diesel inventories are sky high, and as a global crude glut transitions into extra products, it is the part of the barrel that is most worrisome to refiners.

Example: Today finds ultra-low sulfur diesel at the Gulf Coast trading for $1.1615 gal, or about $48.78 bbl, an $8.70 bbl premium to the price of the WTI benchmark. Two years ago on this day, Gulf Coast diesel fetched a margin of $20.92 bbl over WTI.

 

Become a better fuel buyer without ever leaving your desk – sign up now for the OPIS Basics of Fuel Buying eLearning course. Taught by 30+ year industry veteran Scott Berhang, this 11-module online training program will guide you through everything you need to know about purchasing physical fuel. Visit www.opisnet.com/events/fuel-buying-online.aspx or call our eLearning team toll-free at 888-301-2645 for more details and to get started.