Crude/Heating oil
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Started by metmike - Sept. 19, 2023, 9:59 a.m.

I haven't been following those markets recently but something is going on that has HO at +5c and Unleaded unch. So the +$1 for crude is coming entirely from the heating oil upward pressure.

By metmike - Sept. 19, 2023, 10:18 a.m.
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Here's the storage stats. None of the liquid energy stocks are in great shape but the products are close to the bottom and HEATING OIL IS THE LOWEST WITH WINTER COMING UP!

If I remember, refineries (lack of capacity) were struggling to make enough of the products, regardless of how much crude was available. 

The driving season is over. The heating season is coming up so the HO/RB spread is usually strong.

HO +6c.......make that +7c now

UNL -1c

HO/RB spread +7c today, make that +8c

CL +$1/29

By metmike - Sept. 19, 2023, 4:49 p.m.
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Those prices earlier for HO/RB are for November. The front month, Oct is bound to be even more extreme.

Nov HO +9c

Nov RB -3c

Wow! the HO/RB spread gained 12c today. That probably happens on less than 1% of trading days!

Crude close to unch.

By metmike - Sept. 19, 2023, 4:52 p.m.
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Diesel, Heating Oil Squeeze Lurks for US East Coast


Pay walled source but the title from YESTERDAY shows they nailed it!

By metmike - Sept. 19, 2023, 4:58 p.m.
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Low US heating oil stockpiles could cause winter sticker shocks


Sept 4 (Reuters) - Americans could face a sticker shock with their heating bills this winter, especially if it is a chilly one, due to unusually low U.S. stockpiles of distillate fuels following OPEC+ crude supply cuts and higher demand from Europe, analysts said.

Distillate inventories, which include diesel and heating oil, were by late August about 15% below the five-year average for this time of year, according to the Energy Information Administration.

At below 118 million barrels, stocks represented around 31 days of supply.

"We are living barrel to barrel and there is just no room for errors in the system," Price Futures Group analyst Phil Flynn said. "If we get a cold winter, there are going to be significant price shocks."

Refiners have failed to build sizable stocks ahead of the seasonal surge in demand due to tight supplies of medium and heavy crude oil grades that are distillate-rich.

Production cuts by the Organization Petroleum Exporting Countries and its allies, known as OPEC+, have already squeezed global market for medium sour crude and middle distillates, which will be further tightened by Saudi Arabia's unilateral cuts, said Bjarne Schieldrop, chief commodity analyst at SEB.

In addition, U.S. exports have helped to deplete stockpiles of the fuel amid strong demand from Europe after Russia's invasion of Ukraine last year led to sanctions on Moscow's energy trade


Another key realm experiencing serious consequences from really bad political and energy policies. I didn't start this thread thinking that at all but the facts led there. 

By metmike - Sept. 19, 2023, 5:29 p.m.
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Crude stocks below are extremely high right now. The problems are:

1. We've drained a lot of the SPR

2. More important, we don't have the refinery capacity to turn crude into the products, especially gasoline and heating oil/diesel.

3. Clearly, refineries have been churning out the gasoline at the expense of heating oil. Maybe to keep the price at the pump lower for political and other reasons? since almost everybody uses gasoline but a much smaller fraction use heating oil/diesel. 

4. You can bet that the extra cost of diesel used for transporting goods across the country that gets dialed into the prices, is a significant contributor to inflation. 

Crude stocks by itself below.

SPR below

COMBINED crude that includes the SPR oil. Not so robust!

Gasoline stocks below are not especially low, especially considering we're past the main driving season/vacations.

Heating oil stocks below. Not quite as low as last year at this time which was the lowest in the 4 decade data base for September but very low considering its BEFORE the entire heating season/Winter for the Northeast and other areas that use the most heating oil. It's the 2nd lowest for this time of year in the last 2 decades.

By metmike - Sept. 19, 2023, 5:41 p.m.
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From last year(when the shortage/high prices were even worse but its currently still the 2nd lowest in the last 2 decades):

The astronomical price of diesel is making everything more expensive

Some truckers might choose to stop driving if prices go up more


Diesel's spiraling price has also contributed to U.S. inflation, which reached a 40-year high this year.  

After all, trucks move 70% of all freight in the U.S. from transporting goods on land to those that come off a cargo ship or a train.    

Most trucking companies pass on increased fuel costs to their customers through fuel surcharges.   

"Ultimately you and I as consumers will see this on the store shelves in the price of the products," says Bob Costello, chief economist with the American Trucking Association.

By metmike - Sept. 19, 2023, 5:46 p.m.
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Why is Diesel Fuel More Expensive Than Gasoline?

Diesel fuel, the kind of fuel commonly used in commercial trucks, has not always been more expensive than the standard gasoline used in passenger vehicles.  On paper at least, diesel fuel is a less refined petroleum distillate than gasoline, so it should always be cheaper to produce than gasoline.  The problem with diesel fuel prices has more to do with the laws of supply and demand for various petroleum products, not the actual cost of production.                                                                                                                                          

       A barrel of crude oil can be "cracked," or broken down into a number of different products, from home heating oil to gasoline to kerosene.  Oil refiners can only process a fixed number of these products at one time, however, so they tend to choose the products in highest demand at the time. This generally means gasoline for passenger vehicles takes precedence over diesel fuel for commercial vehicles.  When the supply of diesel fuel is low, the price naturally goes higher.                                                                                                                                                     

At some point in the year, oil refiners concentrate their efforts on another product similar to diesel fuel: home heating oil.  At this point, usually just before winter, diesel fuel becomes more plentiful and the price usually drops. This trend doesn't always hold true, however, since a particularly cold winter can keep demand for home heating oil high and once again put diesel fuel production lower on the refiner's agenda.                                                                                         

 In recent years, the federal government has mandated changes to the acceptable sulfur level of diesel fuel, and refiners must comply with these mandates to create an ultra low sulfur diesel fuel product.  This means significant investments in new technology and several distillations before the finished fuel is deemed acceptable by government inspectors.  All of these additional regulations and high-tech equipment can cost billions of dollars, and these expenses are often passed onto consumers through higher prices.                                                                                                                                                                                   

There are also higher federal excise taxes placed on diesel fuel compared to standard gasoline.  Some critics suggest the federal government is less eager to impose higher taxes on millions of private drivers than thousands of commercial drivers who use a less popular fuel.  Part of the reason diesel fuel is more expensive than gas is the total amount of federal and state taxes added to each gallon.                    

In many other countries, diesel fuel is still much cheaper than petrol, and there are significantly more diesel-powered passenger vehicles on European and Asian roadways.  If more drivers in the United States were willing or able to switch to diesel-powered vehicles, the price per gallon of diesel fuel might begin to fall below that of gasoline.  More refineries would have the financial incentive to process more diesel fuel during peak driving months, and more fueling stations would offer standard diesel or the more ecological friendly bio-diesel at competitive prices.

By metmike - Sept. 20, 2023, 11:54 a.m.
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Today, the HO is -6c, undoing much of the gains yesterday.

RB -1c

CL unch

Just a short squeeze yesterday?