Nov 23 (Reuters) - The average price of a gallon of gasoline in the United States dropped 10 cents in the past two weeks, hitting a four-year low, according to the latest Lundberg survey released on Sunday. Gasoline prices fell to $2.84 per gallon of regular-grade gasoline, the lowest level since November 2010, said the survey conducted on Friday.
The decline in price was driven by lower crude oil prices, said Trilby Lundberg, publisher of the survey.
"Circumstances continue to favor low oil prices," Lundberg said, adding the oil supply remained very abundant and that the stronger dollar helped. "For months now it has been crude oil leading the price down."
The gasoline price is down about 41 cents a gallon from a year ago and has dropped 88 cents from a 2014 peak of $3.72 in May. The highest price within the survey area within 48 U.S. states was recorded in San Francisco at $3.14 per gallon, with the lowest in Albuquerque, New Mexico, at $2.47 per gallon.
LONDON, Nov 24 (Reuters) - The European oil refining industry would be better off with just 60 plants, a cut of around 40 percent from today's number, a report from Dutch bank ING said on Monday, but the risk that inefficient refineries will stay open is high, prolonging the pain.
Nearly 22 European refineries have closed since 2009, equivalent to 2.3 million barrels per day (bpd) of capacity, while another 15-20 plants have been sold by oil majors to independent traders or investors, the report said. But ING argued it would be better for the industry if another 40 plants closed given the high costs of doing business in Europe and growing competition from overseas refineries.
The industry consensus is that about 10 medium-sized refineries need to shut by 2020 in order to balance the market. But closing plants takes time and usually only follows the failure of a long, drawn-out sales process, as with Murphy Oil's Milford Haven refinery. Hamza Khan, senior commodity strategist at ING and the report's author, said that although the oldest, less complex plants were often the weakest, they also tended to have the strongest ties to the local community, and therefore could be the most difficult to close from a political perspective. "That leaves Europe at risk of a product imbalance because the older refineries create more gasoline," he said. "If your goal is to satisfy demand then keeping the old ones that don't create the product slate that people use is shooting yourself in the foot. Then it becomes a war of attrition or a pyrrhic victory - you've managed to keep the refinery alive but you're just lowering your ability to raise revenues."
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NEW YORK, Nov 21 (Reuters) - Ethanol 2014 Renewable Identification Number (RIN) credit prices fell in anticipation of the U.S. Environmental Protection Agency's announcement on Friday that it will not finalize 2014 biofuel requirements by the end of the year, brokers and traders said.
In the cash market for RINs, ethanol credits for the 2014 compliance year traded as low as 45 cents each, then bids recovered to 48 cents, brokers said. The credits traded from 57 to 58 cents on Thursday.
Ethanol makers cheer as EPA punts on renewable fuel mandate decision (SA Breaking News 6:45 pm)
Ethanol and other biofuel groups are declaring victory, as the EPA today said a decision to finalize blending requirements for 2014 - first proposed more than a year ago - has been delayed.
The delay gives hope to ethanol producers that the EPA will rethink how it proposes the annual biofuels levels; the draft 2014 biofuels levels were much lower than the ethanol industry wanted.
Oil company lobbyists opposed to the law say the idea of setting a retroactive quota shows the EPA is incapable of managing the program; the American Fuel & Petrochemical Manufacturers, which represents energy companies, plans to sue the EPA for failing to issue the 2014 requirements.
SA Breaking News 3:43 pm
Enbridge Energy Partners (EEP +0.2%) says it may build a 120K bbl/day rail terminal at the Cushing, Okla., oil storage hub, another sign that rail is being integrated into key oil infrastructure.
The terminal, which would be complete by the end of 2016, would handle two inbound and two outbound unit trains a day; the crude oil probably would come from Canada, and final destinations would depend on consumer interest.
SA Breaking News 10:28 ET
The EPA will abandon its proposed rule setting renewable fuel targets for 2014, with an announcement to come today, according to a Bloomberg report.
CHICAGO, Nov 19 (Reuters) - U.S. ethanol futures tumbled more than 7 percent on Wednesday after the Energy Information Administration pegged production of the grain-based biofuel last week at the second highest level on record. The EIA said ethanol production in the week ending Nov. 14 averaged 970,000 barrels per day, the highest rate since the record production of 972,000 bpd in the week of June 13.
Biofuel makers have ramped up operations three weeks in a row amid plentiful supplies of corn in the wake of a record-large harvest. Comparatively low corn and high ethanol prices resulted in the best profit margins in months for ethanol producers. "Everybody thought you were going to get a production response out of that (the high profit margins), and here it is," said Jerrod Kitt, broker at the Linn Group in Chicago.
Ethanol futures for December delivery fell nearly 15 cents to $1.92 per gallon, with the percentage decline the largest in the life of the contract. However, slow U.S. rail transportation is keeping biofuel prices elevated for blenders and exporters located near U.S. Coasts - far away from most ethanol plants in the Midwestern crop belt. Prices for New York Harbor ethanol of $2.43 per gallon were the highest since May as of Friday, the most recently available data. Stocks of ethanol also declined last week by 370,000 barrels to 17.34 million barrels, indicating good demand, EIA data showed. "There's still a sense that prompt supply is tight," Kitt added.
(SA Breaking News 6:57 pm)
TransCanada CEO on Obama’s Keystone comments: "Pure fabrication"
TransCanada (NYSE:TRP) CEO Russ Girling fired back at Keystone pipeline opponents and Pres. Obama during the company's investor day, saying that describing the controversial project as an export pipeline is “pure fabrication.”
Crude oil is part of a global market, and given that there are 4.5M barrels of oil imported to the Gulf Coast every day, Girling said describing Keystone XL as an export pipeline “doesn’t make any sense."
Girling is not giving up on the project, saying “The marketplace need for Keystone has probably grown... Our 20-year shipper contracts remain in place. Not one of those shippers has given up their capacity.”
SA Breaking News 5:59 pm
The U.S. airline industry made no net improvements on fuel efficiencies last year, raising questions about its ability to reduce carbon emissions as fuel costs level off and fall, giving companies little price incentive to cut their consumption, according to a new report.
Although small, ultra low-cost carriers made significant gains last year, their progress was offset by the larger legacy carriers which continue to burn more fuel, the report says.
You are posing three questions, which refineries can process Canadian tar sands crude, which refineries will benefit if the northern leg of the Keystone XL pipeline is built and what benefit accrues from building the northern leg of the pipeline.
Any complex refinery can process heavy sour crude, and they are scattered across the country. Even refiners in the Golden State (environmentalist heaven) are shipping Canadian tar sands crude by rail.
The primary beneficiaries of the Keystone XL are complex Gulf Coast refineries. Owners of those include PSX, MPC, Motiva, ALJ, XOM and VLO that i can think of off the top of my head.
Benefits of building the pipeline include a major contribution to North American energy independence, which resonates throughout the economy in creating and retaining jobs, and reduced hazards of shipping crude by rail.
Crude +2.6M barrels vs. -1.7M last week. API reported +3.7M. Platts estimated -0.7M.
Gasoline +1.0M barrels vs. +1.8M last week. API reported +0.5M. Platts estimated +0.6M.
Distillates -2.1M barrels vs. -2.8M last week. API reported -3.3M. Platts estimated -1.2M.
U.S. crude oil refinery inputs averaged over 15.9 million barrels per day last week, 161,000 barrels per day more than the previous week’s average. Refineries operated at 91.2% of their operable capacity. Gasoline production increased, averaging over 9.6 million barrels per day. Distillate fuel production decreased last week, averaging about 4.8 million barrels per day.
According to Platts, exports provide an additional outlet for distillates, helping drain inventories and offsetting the impact from increased domestic production. U.S. distillate exports to Europe rose sharply to 440,000 metric tonnes (mt) last week from 140,000 mt the previous week, as a tight supply picture in Europe improved the economics of shipping distillates after a prolonged period of closed arbitrage.
SA Breaking News 08:44 ET
Pres. Obama may consider using the Keystone pipeline as leverage with Republicans if they cooperate on other aspects of his domestic agenda, according to news reports.
With the Senate's narrow defeat of a Keystone bill yesterday, Obama avoided the awkward position of possibly vetoing a bill supported by several Democrats, but the issue is sure to come up again after the new year when Republicans take control of both houses of congress.
Barron's 10:53 A.M. ET
GS resumes the group at Attractive, with Buy ratings on MPC, PSX and DK and added TSO to the conviction list..
- Refiners are defensive in a weak crude tape Given industry economics are driven more by crude spreads than the directional oil price – we believe refiners represent one of the few energy sectors that can grow cash flow in a declining crude price environment. In addition, we see a seasonal trading tailwind for refiners in 4Q/1Q.
- Brent-WTI should widen out – a key positive We expect Brent-WTI spreads will widen out from $4/bbl currently to $10/bbl in 2015-2016 as US oil production/pipeline growth outstrips refining additions.
- Underappreciated SOTP value in midstream Midstream/MLP segments provide SOTP upside to refiners from growth, stability and cash flow.
- Refiners offer FCF, returns and dividend yield We forecast refiners will generate 9%-11% of the current market caps in annual FCF and 15% ROCE in 2015/2016. Cash flow supports a healthy dividend yield of 3.0%, on median, for the sector.
(SA Breaking News 10:49 am)
Obama does not sound receptive to quick action on Keystone pipeline
Pres. Obama offered his most pointed comments about the proposed Keystone XL pipeline (TRP -0.8%), signaling a coming confrontation with Republicans as they try to force approval of the pipeline.
“Understand what this project is: It is providing the ability of Canada to pump their oil, send it through our land down to the Gulf where it will be sold everywhere else. It doesn't have an impact on U.S. gas prices,” Obama said today during a visit to Myanmar.
“I have to constantly push back against this idea that somehow the Keystone pipeline is either this massive jobs bill for the United States or is somehow lowering gas prices," the president added.
WASHINGTON, Nov 13 (Reuters) - The Republican-led U.S. House of Representatives prepared to vote on Friday to approve the Keystone XL oil pipeline that will help transport oil from Canada to the U.S. Gulf of Mexico, but the bill still faces hurdles to final passage. The House planned to begin debating the bill, which is expected to pass that chamber, on Thursday. The legislation would circumvent the need for approval of TransCanada Corp's $8 billion project by the Obama administration, which has been pending for more than six years. It would ... be a blow to President Barack Obama if members of his Democratic Party joined Republicans to approve the pipeline. It was not yet clear if Obama would use his veto, but he has threatened to veto Keystone legislation in the past.
he Senate could take up the bill next week, possibly on Tuesday. Energy and Natural Resources Committee Chairman Mary Landrieu, a Louisiana Democrat, led the effort to approve the bill in the Senate, but it appeared on Thursday that she did not yet have enough votes to be sure of passage. Two Senate aides said Landrieu is one to two votes short of the 60 in the 100-seat chamber that are needed to withstand a potential filibuster, a procedure that effectively blocks passage of a bill.
If the bill passed, it would set up a showdown with the White House. Senior White House adviser Valerie Jarrett declined on Thursday to say whether Obama would sign a bill. "We've always taken a dim view of the legislative approach," she said in an interview with MSNBC, echoing earlier White House comments. She said the White House had not seen the proposed bills. Obama has vetoed only two bills during his presidency, far fewer than his predecessors. If he vetoed a Keystone bill, Congress could try to override him.
The pipeline also faces a court challenge in Nebraska over its route. A ruling on that case is possible within the next few weeks.
NEW YORK (AP) — Those low gas prices on station signs aren't going away soon, the government says.
In a dramatic shift from previous forecasts, the Energy Department predicted Wednesday that the average price of gasoline in the U.S. will be below $2.94 a gallon in 2015. That a 44-cent drop from an outlook issued just a month ago. If the sharply lower estimate holds true, U.S. consumers will save $61 billion on gas compared with this year.
Rising oil production, particularly in the U.S., and weak spots in the global economy have led to a sharp reduction in oil prices over the past four months. Not seeing much of a change ahead, the government cut its forecast for global oil prices next year by $18 a barrel to $83. As a result, U.S. drivers will pay on average 45 cents less for a gallon of gas next year compared to this year. Based on expected gasoline consumption, that's a savings of $60.9 billion.
That may not seem like a lot in the context of a $17.5 trillion U.S. economy, but economists say it matters because it immediately gives consumers more money to spend on other things. Consumer spending accounts for 70 percent of the U.S. economy. "It would be a reversal of the trend over the last few years where consumers can't stretch a dollar far enough," says Tim Quinlan, an economist at Wells Fargo. Quinlan says the price of gasoline is one of the three big drivers of consumer confidence, along with stock prices and the unemployment rate. "Lately all three are moving in the right direction," he says.
After falling for 48 straight days, the average gasoline price in the U.S. is $2.92, the lowest since December of 2010, according to AAA. That was also the last full year when the average came in below $3 a gallon. While it's not unusual for gas to hit its low for the year in late fall, the government is now saying that these prices aren't just a low point, but instead will be the norm next year.
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Crude -1.7M barrels vs. +0.5M last week. API reported -1.5M. Platts estimated -0.5M.
Gasoline +1.8M barrels vs. -1.4M last week. API reported -1. 7M. Platts estimated -0.3M.
Distillates -2.8M barrels vs. -0.7M last week. API reported +0.6M. Platts estimated -1.6M.
U.S. crude oil refinery inputs averaged about 15.8 million barrels per day last week, 267,000 barrels per day more than the previous week’s average. Refineries operated at 90.1% of capacity. Gasoline
production decreased, averaging over 9.3 million barrels per day. Distillate fuel production increased, averaging over 4.8 million barrels per day.
API also reported the gasoline crack spread versus WTI widened $2.35 to $18.85 a barrel last week.
WASHINGTON, Nov 12 (Reuters) - Bills to take approval of the contentious Keystone XL pipeline from Canada out of the hands of the Obama administration could be headed for votes in the U.S. Senate and House of Representatives.
Democrat Mary Landrieu, chair of the Senate Energy Committee, said she would propose debate later on Wednesday and a vote on Thursday on a bill floated in May to approve the project, which would deliver heavy Canadian oil sands crude to the U.S. Gulf Coast. Landrieu of Louisiana, who faces a runoff election in December against Representative Bill Cassidy to retain her seat, said on the Senate floor she was "confident" she has the votes to pass a bill on TransCanada Corp's $8 billion project.
Republican Cassidy immediately countered by introducing an identical bill in the House, H.R. 5682.
LONDON, Nov 12 (Reuters) - Refinery problems in the Americas are drawing European gasoline cargoes across the Atlantic, providing timely support to refining margins that had been expected to fall at the end of the maintenance season.
Noble, Vitol and Glencore are redirecting already booked cargoes into Venezuela, traders said, to meet demand for 2.4 million barrels of refined products caused by local refinery outages. Distillates that were set to sail to Europe from the United States - a key source in recent years - are also now going south. Traders who had expected roughly 800,000 tonnes of U.S.-Europe arbitrage flow in November are revising the figure down to around 250,000-300,000 tonnes.
The tenders from Venezuela add to already strong demand from Ecuador, Brazil and Peru, as well as for stock building on the U.S. Atlantic coast ahead of winter. At least one cargo from Saudi Arabia's 400,000 barrel per day Jubail refinery is en route to Ecuador on the Falcon Express, according to ship tracking data, and traders said it could buy more. The long journey around the southern tip of South America, along with a string of other bookings from the U.S. Gulf, underscores Ecuador's thirst for diesel while its own refineries undergo maintenance.
The pull is supporting margins in Europe following an already exceptional third-quarter performance that enabled an unseasonal increase in crude runs. Margins are holding at $6.46 a barrel on average for November, just 40 cents lower than September and nearly $2 a barrel above November last year, according to Reuters data.