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HollyFrontier Corporation Message Board

  • precaud precaud Apr 29, 2012 8:38 AM Flag

    Big-picture stuff

    Gasoline prices may be coming down out east, but not out here in HFC's market areas. Regional inventories may be showing why: Conventional gasoline stocks in the RM are below same time last year and near an all-time low (this may be the influence of UNEV). They are near historic lows in the MW and WAY below last year in the GC.

    Diesel stocks are very low in the MW, just above last year in the rockies, and WAY below last year in the GC, reflecting the increased exports down there. With planting season about to start in the MW, expect MW and RM diesel stocks to go down further over the next month.

    Crude inventories continue to build across the country, especially in the RM and MW (no surprise). Cushing and GC are about 5% above last year; RM is nearly 10% higher. Production is not only outpacing takeaway capacity, but demand.

    The overall pattern of rising oil inventories and lower product inventories is very bullish for the refiners and bearish for crude pricing, though seasonality may prop up crude prices. The coming pipelines are not going to change this; as each comes on line, it will shift the mix of oil supply source incrementally, but only temporarily, swamped by increasing production.

    Everything points to staying long the refiners, except the WC ones, who have none of the geographic/logistic advantages.

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    • Please explain.." swamped by increased production "...Shaleoil from dakota-tarsand oil from Canada ?

      • 1 Reply to dalerobin777
      • Yes, from ALL inland sources - Canada, Bakken, Niobrara, Permian, Eagle Ford, etc. It is all seeking an end market. Anything not taken by an end user has to be stored somewhere, like in Cushing. Crude inventories are up everywhere except the EC over last year. The WC is especially high. Lots of high-priced crude there.

        Cushing inventory alone is increasing by an average of 600K bbls/week for the last couple months. Seaway reversal will normalize that somewhat... for a short time. But production is rising and inventory elsewhere will continue to build... volumes to Cushing will increase... it's like an inflating balloon that gets squeezed here but then bulges there.

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