OPIS Headlines

January 20, 2016
Popular Crude Blends Bid Adieu to $30; Others Sink Under $20, $10 and $5

All of the crude oil benchmarks are now well below $30/bbl, but some of the posted prices for North American crude have dropped to levels last seen at the turn of the century.

Yesterday was a historical day for most of the popular high-volume crude oil blends. Thanks to a weak close for WTI futures ($28.46/bbl), OPIS could not find a single case of a global or North American spot crude oil barrel fetching $30/bbl. The Light Louisiana Sweet (LLS) barrels, for example, were pegged just 90cts/bbl over WTI, suggesting an outright price of perhaps $29.36/bbl. Most of the medium and heavy Gulf Coast sour crudes traded at discounts of $4.50- $4.80/bbl off the WTI settlement, and have accordingly dropped below $25/bbl.

But if you really want to see some eye-popping crude oil values, you should take a look at the hundreds of FOB points for coastal and inland crude oil blends that OPIS follows across North America. The most extreme number pops up in North Dakota. Crude oil postings differ from rack product postings in that the buyers declare how much they are willing to pay for a given barrel and origin of crude.

Most buyers were willing to pay no more than $8.50-$11.50/bbl for these barrels in mid-January, but Flint Hills Resources has steadily dropped its price to negative $1.50/bbl this morning. That's right -- Flint Hills will only take the barrels if the producer is willing to pay them $1.50/bbl to move the crude to a destination.

It's not likely that any deals are being consummated at negative numbers, but it underscores the traumatic damage for U.S. local crude oil producers. Most of the numbers quoted in the press every day are for high-quality, high-volume barrels that are fetching far more than what comes from some of the smaller fields.

Note: OPIS has maintained a comprehensive database of U.S. crude prices for more than a decade and each day releases a report that updates the latest numbers and changes for hundreds of locations and dozens of companies. For a free sample of this report, contact Scott Berhang at 301-287-2332, or via e-mail at sberhang@opisnet.com.

Here's a rundown of prices OPIS reported this morning, ahead of new $1/bbl or greater decreases in the benchmark grades that serve as a basis for North American deals:

Rocky Mountain Low: You can find Montana crude oil blends for as little as $10.75-$11.75/bbl and the black and yellow waxy crudes in Utah are generally priced between $22.70-$24.67/bbl. Wyoming asphaltic sour crude was pegged as low as $8/bbl yesterday, but this morning saw Shell drop the price it is willing to pay to just $5.75/bbl. Medium sour crude out of Wyoming isn't much better at a price just under $12/bbl. Colorado blends have moved for $17-$18/bbl in the last 24 hours.

Texas: One usually associates Texas crude with some of the attractive prices witnessed for West Texas Intermediate, but the panoply of other Lone Star state crudes finds some old time prices. Some of the very high gravity Eagle Ford condensate is priced as low as $11.50/bbl this morning, although the higher quality material is closer to $20/bbl. West Texas Sour prices are pegged around $20/bbl in the fields and OPIS confirmed that South Texas Sour crude postings have dropped to $11.75/bbl. Fields in the neighboring state of New Mexico have dropped to just $16.46-$17.42/bbl this morning for San Juan Basin Sweet barrels.

California: For a long time, the benchmark for California refiners was Alaskan North Slope crude (ANS), and March deals for that high-quality light sweet barrel were consummated yesterday at $2.85/bbl off the March WTI average. Based on recent NYMEX action, that price might ultimately be well under $25/bbl. From 2010 through most of 2015, the ANS crude fetched a premium of anywhere from $1/bbl to more than $6/bbl over WTI.

The heavy sour legacy California barrels of crude are priced in a wide range, but recent days have seen values plunge to under $17/bbl for some of the more sour material.

Oklahoma: Buyers may be able to get $26-$27/bbl for sweet crude oil at Cushing, but once you look at the actual production areas of the state, you find far cheaper numbers. Example: OPIS saw Oklahoma sour crude priced at $12-$13.50/bbl in numerous cases, with one buyer declaring a purchase price of just $9.27/bbl.

Odds & Ends: As anyone familiar with U.S. production statistics recognizes, there are a number of states that provide output of crude from wells commissioned many years or even decades ago. Illinois and Indiana sweet crudes are barely hanging above $21/bbl, with a similar number heard for Western Kentucky production. Central Kansas sweet prices have dropped to $18-$19.50/bbl and Eastern and Northwest Kansas find numbers between $10.75-$16/bbl with some Kansas sour crude buyers no longer willing to pay a ten spot for oil. Nebraska postings today were in the $14.50-$15.80-bbl range. Along the Gulf Coast, the little quoted Alabama and Mississippi numbers have dropped as low as $14.25- $17.25/bbl.

 

OPIS Crude Oil Prices helps you avoid time consuming calls to bulletin information hotlines and redundant faxes. OPIS has the most comprehensive crude posting coverage including all major refiners in the U.S. and Canada with over 600 grades and locations. Learn more and start your free 5-day trial here: www.opisnet.com/products/crude-oil-prices.aspx


December 8, 2015
Europe Jet Fuel Prices Fall Under $400/Ton

The price of European jet fuel has fallen to its lowest level since the nadir of the last recession, but analysts predict that the product's crack values will not improve until February next year at the earliest.

A growing overhang of jet stocks in the Amsterdam-Rotterdam-Antwerp (ARA) area resulted in Northwest European FOB jet cargoes falling to under $400 per ton today -- the lowest levels seen since the middle of March 2009 when the global economy was in free-fall.

But analysts believe the supply of jet fuel could be boosted while prices remain higher than diesel.

"It is very likely that the [jet] market will remain weak," Michael Dei-Michei, an analyst at JBC, told OPIS.

"Crude runs are not yet at maximum and can increase.

"At the same time, you now have a picture emerging where jet production looks more attractive than diesel, so if that persists, you can assume that refineries will slowly but surely start to raise [jet] yields after trying to cut all year. ... you may have potential for jet to remain above diesel for a few weeks."

Dei-Michei saw protracted weakness for middle distillate crack values over the winter: "The overall middle distillate market is just massively oversupplied. Cracks have no real upside potential."

The crack to refine jet fuel in the ARA region for sale in the barge market was today seen at $8.55/bbl, OPIS figures show. That's down from $10.12/bbl seen on Nov. 23, and highs of as much as $17/bbl seen in January.

Diesel barge cracks today slumped to $8.08/bbl, and show a steeper decline than jet fuel. Cracks were as much as $12.47/bbl on Nov. 19, OPIS figures show. OPIS calculates the crack based on rolling Brent.

Prices for jet fuel and diesel would only begin to recover with the onset of refinery maintenance work, according to JBC Energy.

"We do not see the middle distillates overhang going anywhere at least until February when we would assume that the chances are better that significant amounts of maintenance will actually cut production globally.

"That will at least temporarily make supply and demand match better," the company said.

Jet stocks in the ARA trading hub reached 6.67 million barrels in the week to Dec. 3, according to data from BNP Paribas. That's a 77.7% rise on the same time last year and represents the highest percentage rise over the year for any of the products stored in the ARA area.

The OPIS Worldwide Jet Fuel Report is the only service providing in-depth coverage of airline jet fuel buying prices at the nation's top airports and allows the carriers to plan routes more efficiently. Virtually every gallon of jet fuel sold to the nation's biggest consumer - the Defense Fuel Supply Center - is benchmarked to an OPIS jet fuel price index. Go here www.opisnet.com/products/worldwide-jet-prices.aspx for more information and learn how you can start your 5-day no-obligation free trial.


December 7, 2015
Irving Oil Refinery Resumes Full Rates; Seen Pressuring RBOB Futures

Irving Oil's 300,000-b/d Saint John refinery has returned to normal production rates after a slow restart process following a massive $200 million turnaround, trading sources said on Monday, a move that should further weigh on the already feeble gasoline futures prices.

The latest market talk among New York Harbor participants was that Irving's refinery, located in the province of New Brunswick in the east coast of Canada, has restarted all its production units after a 2.5-month maintenance project, which should have been completed by mid-November.

"It's up and running fine now," said a source, referring to the current status of the Irving refinery.

Another source said that, considering current gasoline crack spreads and RBOB contract-rolling positions, the refinery must be at least close to full production.

An Irving Oil spokeswoman did not return requests for comment.

On Monday, NYMEX front-month January RBOB futures finished at their lowest since February 2009 at the height of the last global economic crisis. The contract settled down more than 6cts/gal, under $1.21/gal.

Spot differentials for New York Harbor cash RBOB barrels went home 1.50cts/gal lower, at just 50pts above NYMEX December RBOB futures. Less than a week ago, Harbor RBOB gasoline was trading at a nickel over the Merc.

Irving is traditionally a net seller and a major exporter in the New York Harbor and New England markets.

Speculations about Irving's refinery also could move NYMEX futures, because New York Harbor is the delivery point for NYMEX product futures.

The Northeast bulk gasoline market had showed momentary signs of tightness in the entire month of November.

OPIS noted that gasoline cargo imports into PADD1 (East Coast) have dramatically dried up in the last two months. There was also talk that Irving had been actively buying barrels in the Northeast and in Europe.

Late last week, traders told OPIS that the refinery was operating on one crude distillation unit, while another CDU remains down despite several attempts to restart. Irving has attempted to restart its gasoline-making fluid catalytic cracking (FCC) unit several times since mid-November.

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December 3, 2015
PEMEX Opens First Retail Gasoline Station in Houston; 4 More to Come

Mexico's PEMEX opened its first retail gasoline station in Houston area Thursday, and four more are underway, industry sources told OPIS.

This is also the first PEMEX retail station in the U.S. PEMEX has plans to expand its retail brand to other states in the near future.

The station is located at 7922 Park Place Blvd., off Interstate 45. PEMEX will open one retail station every week in Houston for the next four weeks.

These stations will receive fuel supplies from wholesalers and/or refiners on the Gulf Coast. Supplies will not come from PEMEX or PMI.

This is part of PEMEX's strategy to expand into international markets as a retail brand and to compete with brands that potentially may open retail outlets in Mexico, sources said.

Mexico is expected to open up its retail and downstream fuel market over the next few years as part of the ongoing energy reform.

In 2016, players in Mexico are allowed to build their own retail stations without a need to obtain a license from PEMEX, but retailers will continue to buy supplies from PEMEX and follow pricing set by PEMEX next year. In 2017, the retail market will be fully liberalized, with players allowed to pick any retail brand and the Mexican retail price will no longer be set by PEMEX.

While the timetable for the gradual downstream market liberalization is set for the next two years, no one seems to be eager to build new retail stations next year or build their own bulk fuel import terminals anytime soon. Most players told OPIS in November that "we'll have to wait and see."

Some retail players said they are not planning to build new retail stations on their own next year because they do not have a clear picture of the domestic price trends after 2016.

They would also like to build new small import terminals for bringing oil products, including gasoline and diesel, into Mexico from Texas in about two years' time, but this move will depend on products price trends in the domestic and international markets.

So far, no one could predict what will happen to the domestic retail price trend in a few years despite the expected free-floating retail price in Mexico in 2017.

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.


November 30, 2015
Supply Jitters Seen as Refinery Woes Plague Calif. through Holiday Weekend

Two California refineries faced fresh setbacks over the long holiday weekend, with Chevron and Tesoro both forced to shut process units at regional facilities, sources told OPIS Monday.

Chevron on Saturday took one of the crude units offline at its 290,500-b/d refinery in El Segundo, Calif., on the heels of a small mechanical fire. Sources said that the unit was undergoing repairs, but a timeline for that work was unclear, as a Chevron spokesperson was unavailable for comment at presstime.

Meantime, Tesoro on Sunday shut an FCC unit at its 276,000-b/d Carson, Calif., refinery. The nature of the breakdown was unknown, but a Tesoro representative confirmed that unplanned maintenance was underway at both the Carson and 107,000-b/d Wilmington portion of its Los Angeles area refining complex.

As previously reported by OPIS, Tesoro confirmed that the Wilmington facility experienced an operational upset and subsequent flaring on Nov. 17. The company said that neither that upset nor this weekend's snag would impact its "ability to meet customer product supply commitments."

Traders today appeared to be feeling the potential supply squeeze, however, with refiner buying ramping up this morning as this weekend's blips put further pressure on regional gasoline output that has been crimped by both planned and unplanned maintenance in recent weeks.

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.