OPIS Headlines

November 24, 2014
OPIS Survey: Mostly Flat Volumes Seen Ahead of the Holiday

An exclusive OPIS survey of nearly 5,000 retail stations nationwide reveals that gasoline volumes were little changed from the previous week. However, the monthly and yearly comparisons do see some backtracking.

For the week ending Nov. 15, gasoline volumes were off on average by 0.1%. While the shift in total gallons of gasoline shifted slightly lower, almost 54% of the participants said the gasoline volumes were up compared to a week ago.

For perspective, the EIA had its implied demand figure for gasoline up by 2.1%.

The monthly and yearly comparisons show gasoline volumes down by more than 1% in both cases, but like the week-to-week comparisons there is a higher percentage of stations that see volumes higher in 2014.

Compared to one month ago, the average station volume is off by 1.2%. Of the nearly 5,000 stations participating in the survey, 50.4% of the stations noted that volumes are higher than a month ago.

Meanwhile, compared to a year ago, station volumes are off by 1.4% with just 47% of the stations reporting a decline. The EIA's gasoline demand figure is running 3% higher than a year ago.

The rolling four-week average sees gasoline volumes down by 1.8% compared to the same four weeks a year ago. Of the stations in the survey, a little more than 54% of the stations reported a decline in volumes.

For more details on volume analysis by state, please contact Brian Norris at 301-287-2413.

November 17, 2014
OPIS Survey: Station Volume Trend Turns Back to Declines

An exclusive OPIS survey of nearly 5,000 retail stations nationwide reveals that gasoline volumes declined for the week ending Nov. 8.

According to the most recent OPIS survey, the average store volume is down 1.2% from the week prior. The weekly decline reverses last week's small uptick in gasoline volumes. Of those participating in the survey, just over 52% reported a week-to-week decline.

The EIA last week also recorded a gasoline demand decline of 1.7%.

The month-to-month and year-on-year comparisons also show weaker gasoline volumes, the OPIS survey reveals. Compared to a month ago, gasoline demand was off by 2.2%, with 60% of the survey participants saying that gasoline volumes were off. Nearly 40% of those in the survey that reported softer volumes had a 5% or more decline.

Gasoline volumes when compared to last year are seeing a decline of 2%, according to the survey.  Just over 51% of the survey participants said that volumes were down when compared to last year. The EIA on the other hand is showing a year-on-year decline in gasoline demand of 0.3%. The rolling four-week average came in at 1.8% lower than the same four weeks a year ago.

For more information on volume analysis by state, please contact Brian Norris at 301-287-2413.


November 11, 2014
OPIS Survey: Gasoline Demand Gets a Bump

An exclusive OPIS survey of nearly 5,000 retail stations nationwide reveals that gasoline demand has gotten back on track with a small week-on-week rise.

For the week ending Nov. 1, gasoline volumes at the stations participating in the survey ended up 0.3%. The move was a small one and the split of stations seeing a gain or loss in total volume was almost 50-50.

The EIA last week said that gasoline demand was up 3.3% for the week ending Oct.  31.

On a month-to-month basis, gasoline volumes are down by an average of 1.3%, with almost 62% of the stations reporting lower volumes than a month ago. According to OPIS volume data, the median store volume was a 2.7% loss.

Versus a year ago, gasoline volumes are down by 1.4%, which incidentally is the same percentage decline that the EIA statistics show. Of the stations participating in the survey, 57% said that volumes were down versus a year ago. Meanwhile, the rolling four-week average shows a decline of 1.5% compared to the same four weeks last year.

For more information on volume analysis by state, please contact Brian Norris at 301-287-2413.


May 21, 2014
Valero Sees Sustainable U.S. Products Export Market

Valero executives, speaking at the UBS Global Oil and Gas Conference, talked about a broad range of trends changing the U.S. oil landscape but one of the highlight comments concerned exports of finished products out of the country.

The U.S. in 2013 shifted from a net importer of refined products to an exporter, and Valero said one of the questions they are often asked is, "Are these export markets going to continue, are they sustainable?" The question is often posed in the context of expanding refinery capacity outside the U.S. that could threaten U.S. exports as overseas refiners produce more of their own products.

Valero is confident that the export markets for U.S. gasoline, diesel and other products are sustainable. A key component underlying Valero's confidence is Mexico and South America. There is a shortage of refining capacity in Mexico, so that country will continue to rely on U.S. products and in South America "they simply don't have enough refining capacity today to sustain their growth in demand," Valero believes.

Valero also sees Latin America, the Middle East, Africa and Asia as the future drivers of global oil demand growth. Valero says it is positioned to take advantage of this because "our products are storable, transportable and fungible." As demand grows, Valero expects to take advantage of that by supplying products to expanding markets.

Valero isn't terribly worried about significant new global refinery capacity additions set to come on stream in the next several years, especially in Asia and the Middle East. "We believe that many of the announced projects are going to be smaller than originally announced (and) are going to be later than announced," Valero said. The country's largest independent refiner of petroleum also thinks that some of the planned projects are going to be shelved because "economics don't support them."

"We also expect that you are going to continue to see rationalization in the refining industry and that some of the refineries who are just not competitive are going to be shutdown," in Valero's view.

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.


May 19, 2014
European Gasoline Market to Rebound on Higher Seasonal US Demand; Diesel Weak

European gasoline market fundamentals have backpedaled a lot since April, and likely driven by a strong aggregate net inventory in the U.S. in the past three weeks, according to a bi-weekly European refining report issued by Credit Suisse on Monday.

However, a stronger seasonal gasoline demand in the U.S. over the next few months should help keep upward pressure on the European oil complex.

Diesel continues to face pressure and the current crack spread clearly show signs of "sink to absorb."

"The outlook here is not rosy, particularly as the Russian refineries have been slower to return, and once they do, supply looks abundant," the bank said.

Fuel oil looked a little more supported with the European arbitrage flow to Singapore looking more workable in a tighter Asian market.

The Brent crude price spread remains wider than the bank had expected, and is likely related to the fact that the May loading program was not particularly tight.

This is related to the Russian turnarounds starting a little later than usual, which means they return a little later and likely with "vengence" in June, Credit Suisse said.

Over the medium term, more crude volumes are likely to be diverted to Asia in light of the long-term pre-payment deals and loans with China.

"Should Russia chose to do more, Asian bound crude are less likely to be satisfied by new East Siberian production, but instead by re-directing crude from Europe, which would likely come at lower netback prices for Russia," the bank said.

Meanwhile, the Credit Suisse Northwest Europe Indicator averaged $4.3/bbl over the past two week, down $0.9/bbl over the prior two week period and continuing the downward trend - most key product spreads worsened.

The Brent-Urals (BU) crude spread was the only relevant countering factor, which is unlikely to remain supportive for long.

This leaves the bank's indicator margin at $5.3/bbl in the second quarter of 2014 so far versus $4.9/bbl for the same period last year. The bank's second quarter forecast  is $5.7/bbl.

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.


May 15, 2014
Uneven Crude Performance Continues: W.C. Refiners See Disadvantages Widen

A very uneven crude oil pricing picture continues across North America, but California refiners continue to see the most disadvantaged pricing, with Southwestern and north central processors finding the lowest priced feedstock.

Sentiment suggests that West Coast refiners, for the most part dependent on local crude or offshore barrels, will see the disadvantage continue until midsummer. OPIS confirmed a July deal for Alaska North Slope (ANS) crude earlier this week at $7.35/bbl above the WTI futures value, or approximately $108.50 bbl. ANS thus retains its status as the most expensive North American crude, trading for $15-$25/bbl over some of the cheaper blends.

The high ANS and offshore numbers in PADD5 put pressure on refiners in the Northwest to move heaven and earth in efforts to bring Bakken crude to the coast. Meanwhile, Bakken numbers have backed off to trade at about $5.50/bbl off June WTI futures, or just above $99/bbl with reports that substantially more aggressive discounts can be garnered for movement of trains to the East Coast ports. PADD1 refiners continue to displace light sweet imports with unit trains of Bakken that lay into refinery storage at several dollars under Brent prices.

The heaviest discounts for crude continue to be witnessed for Western Canadian Select (WCS) which spent the early part of May at about $20/bbl off WTI futures but has rallied to a smaller discount of $19/bbl. Still, that puts the cost of heavy Canadian crude just above $82/bbl in Alberta or around $85/bbl into refineries in some PADD2 and PADD4 cities, giving those processors substantial margins on both gasoline and diesel.

The most closely watched market may be WTI and similar grades in the Permian Basin. With no specific timetable for additional line space to move west Texas barrels to Houston, the middle of May has seen WTI in Midland slip to $8.50/bbl off futures. That is a very steep discount, well ahead of scheduling deadlines and leads to speculation that double-digit discounts could prevail when producers look to get June barrels placed in the next six days.

The most expensive Gulf Coast crude, meanwhile, has steadied after a rough start to the second quarter. June prices for Light Louisiana Sweet (LLS) crude are now about $1.90/bbl above WTI futures, or approximately $103.50/bbl at presstime. That number continues to be much cheaper than offshore light sweet crudes, no doubt accounting for the continuing downturn in foreign imports.

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.


May 8, 2014
BB Energy Expands Gasoline Trading Operations to Northwest Europe

BB Energy (BBE) has made its foray recently into gasoline trading in the Northwest Europe barge market for the first time, trading sources told OPIS on Thursday.

BBE was predominantly involved in only distillates trading in Northwest Europe up until one to two weeks ago when it began to trade gasoline in the barge market. BBE was seen mostly on the selling side of the trades, and the company's Northwest Europe gasoline trading volume has been very limited so far.

BBE is expected to expand its gasoline trading operations further, possibly connecting the dots across the world. It has even crossed the Atlantic to participate in the Petroecuador's term gasoline buy tenders, but it failed to win these tenders.

So far, BBE is seen trading crude and products mostly in Europe, the Middle East and Asia. BBE does not have a trading office in the U.S. Its offices are in London, Athens, Singapore, Dubai and Lebanon.

Peter Andrew is currently trading the gasoline barge market for BBE in London.

BBE also hired Maria Karen Miyasaki Hara, the ex-distillates commercial manager at PMI in Mexico City, a year ago, and she is focusing on trading gasoline for the company in London.
  
PMI is involved in third-party products trading, which is buying and selling fuel it does not already own.

Trading over 11 million metric tons of crude and products annually, BBE is one of the most active gasoil, gasoline and fuel oil traders in the Mediterranean, according to the company's website.

BBE said that it is the largest trader of gasoline in the Mediterranean. It has a large downstream system capacity in the Eastern Mediterranean. In addition, the company acts as a swing supplier for the American and Asian markets. BBE trade more than 1 million tons of gasoline and 150,000 tons of naphtha per year in addition to gasoline components and other specialized products to meet various specifications.

Besides gasoline, BBE is also involved in trading of crude, gasoil, jet and fuel oil.

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 22, 2014
U.S. East, West Coast Refiners to Benefit from Keystone XL Delay: Bank

U.S. East and West Coast oil refiners, such as PBF and TSO, which receive all of their heavy Canadian crude by rail, are the only potential winners following the delay in approval for Keystone XL pipeline project, according to Wells Fargo.

"In our view, the East and West Coasts of the U.S. are highly unlikely to ever receive direct pipeline deliveries of Canadian crudes and thus are most likely to benefit from a significant and persistent discount to maintain competitiveness with the Mid-Continent and Gulf Coast refining regions of the U.S. via crude by rail deliveries," the bank said.

Without the Keystone XL line's new capacity, the Canadian crude pipeline delivery system is expected to remain bottlenecked with excess deliveries dependent on more expensive rail transportation and sustained price discounts, Wells Fargo said.

This is essentially the ratification of the existing market structure. The decision does not affect the bank's expectations, opinions or estimates for U.S. refiners.

Last Friday, the president via the State Department announced an indefinite extension of its review of the Keystone XL pipeline. Wells Fargo had expected a ruling by May 7 based on the prior timeline.

The main reason given for the extension is ongoing litigation in Nebraska. This litigation relates to the specific route of the pipeline and appears unlikely to be resolved for several months at least.

At a minimum, it would appear Friday's announced delay will delay approval until late 2014 at least, the bank said.

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 14, 2014
Texas Dealmaker Lines Up to Buy PMI

A Texas entrepreneur and commercial real estate developer who has handled real estate for ExxonMobil, Walgreens and other Fortune 100 companies is on the cusp of buying a billion-dollar Virginia petroleum wholesaler, Petroleum Marketers Inc. (PMI), based in Roanoke, Va., OPIS has learned.

PMI is an employee-owned company, headed by CEO Ron Hare, so the decision resides with employee stockholders who are in the process of voting. A final tally comes on April 28, according to sources familiar with the deal, who added that terms of the proposed transaction include retention of all PMI employees. The prospective buyer is Joseph "Trey" Smith, the head of the Houston-based company Pinehurst Petroleum, which is making the offer to PMI. According to a business profile, Pinehurst Petroleum is a Texas limited liability company (LLC) created in July 2011.

Industry sources in Texas seem more familiar with another one of Smith's companies, Wildcat Fuels Ltd., a Houston-based multi-branded fuel distributorship created in 2008. Wildcat's website says the company wholesales fuel to "more than two dozen dealers" in Texas and "other Gulf Coast states." It boasts "competitive fuel supply terms" and rapid growth due to "repeat business and significant customer referrals." Wildcat says it does business under the Exxon, Valero, Chevron, Shell and Texaco flags.

The strength of Smith and his partner, Jay Kopfer, is in their real estate skills, which Wildcat's website describes as "unmatched among fuel jobbers." The site boasts the pair have represented multiple Fortune 100 clients and spent hundreds of millions of dollars buying, selling or building retail sites, mostly convenience stores. The site says they negotiated and placed $50 million in sale/leaseback capital on behalf of Dairy Mart Convenience Stores of Cleveland. Ray Hansen, who heads Texas fuel distributorship, Desperado Oil Co., of College Station, Texas, was once Exxon's national wholesale distributor manager. Hansen first met Smith years ago when he was still employed at Exxon and Smith was handling real estate deals for the major. Walgreens also was one of Smith's big clients, and he made frequent use of sale leasebacks wheeling and dealing for the drugstore chain, Hansen notes.

Currently, Hansen, 82, performs accounting services for Wildcat Fuels and he has worked closely with Smith on the board of trustees for Abilene Christian University in Abilene, Texas. He says Smith named Wildcat Fuels after the school's "Wildcat" athletic teams.

Hansen describes Smith as an aggressive, 54-year-old entrepreneur with his hands in several ventures. Smith "knows a lot of people" and has a knack for fundraising, he says. When ExxonMobil was divesting gas stations he says that Smith was among the top bidders for stations in Florida, though the Texan didn't win the package.

Wildcat Fuels has annual revenues of about $125 million and distributes about 35 million a year to 25 to 30 retail sites, he says.

"If he were to continue to grow Wildcat at the rate he has it will be quite large," says Hansen. "They almost doubled the business over the last year or year and a half. And he (Smith) has other ventures."

The Wildcat website says Kopfer and Smith were "instrumental" in developing the short-term and long-term network strategy for ExxonMobil's c-store investments and operations in Texas and have worked for other majors -- Valero, ChevronTexaco, Amoco and ConocoPhillips  -- as well as McDonald's, Bank of America, Metropolitan Life and Walgreens.

Online dealer testimonials praise Wildcat for its marketing support and customer service.

Smith is tied to a maze of other companies with diverse portfolios. The oldest company, Focus Commercial Real Estate, was created in 2002. He also is linked to Zimri Holdings, Stalwart Partners LLC, Aerobic Whl LLC, Cook, Azariah Investments and Cook, Smith and Associates.

Nearly all the portfolio companies were created in the last three to five years. Most are Texas-based and set up as LLCs. Almost all are listed as using the same Houston address at 7062 Lakeview Haven Drive.

Smith is also listed as having an interest with Jeff Mallet in Sun Mart Shops, also based in Houston.

Calls to Smith to learn more about his companies and the assets he manages had not been returned as of presstime.

OPIS learned that should Smith succeed in acquiring PMI, he will relocate to PMI headquarters in Roanoke to run the company, replacing CEO Ron Hare.

PMI has been in the petroleum business since 1950 serving the wholesale, retail and terminal supply chain, along with operating a real estate and lube oil business. Annual gross sales exceed $1 billion, sources say, through subsidiary companies PM Transport, PM Terminals, PM Foods and PM Lubricants.

PMI distributes gasoline, diesel fuel and other products through branded dealers flying the Exxon, Shell, BP and CITGO brands. PMI also retails gasoline under its private Stop IN Shop brand, with 81 sites located almost exclusively throughout Virginia. The PMI Foods Division has a half-dozen locations in Virginia with the Burger King, Arby's and Subway logos.

PMI Terminals operates eight bulk plants through Virginia under the auspices of Whiting Oil, Northern Neck Oil, Lynchburg Oil, Buck Oil and Fuels Oil.

Distribution points include Richmond, Roanoke, Culpepper, Covington and Lynchburg, Va.

Founded in 1979, PMI Transport hauls fuel via a modern fleet of transport trucks operating out of Richmond and Roanoke. For most of the last 25 years, PMI has been consistently recognized by Exxon and Shell as one of their top branded distributors in the U.S.

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.